U.S. Staring Down the Barrel of a Recession, Chamber Economist Says
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Without congressional action to avert driving off the fiscal cliff, the nation could plunge into a recession by next summer, U.S. Chamber Chief Economist Marty Regalia told a group of reporters at the Chamber's annual end-of-summer economic briefing. “Just the fact that it’s hanging out there is dampening economic activity,” Regalia said.
While the underlying economy is showing signs of a comeback; including improvements in the stock market, overall economic growth remains "fairly moribund" at 2.2% to 2.3% - a modest rate of rate of growth that is simply “not fast enough” to bring down an unemployment rate that is still hovering around 8%.
However, even that modest "treading of water" is endangered if Congress allows the Bush-era tax rates for middle and upper income individuals to expire and federal spending cuts go into effect as scheduled in January 2013. "If we don't figure out how to kick this can down the road, at least in the relatively short term, we will almost certainly be in a recession by the time we meet again at the end of next summer.”
Regalia also had words of advice to those who have suggested using the threat of the fiscal cliff to make a political point or as leverage to ram through their own political agendas: “Going off the cliff is not the preferred strategy. Going off the cliff will not make the world better for people trying to get jobs.”
Regalia also addressed last week’s jobs numbers. The Labor Department reported that business had only created 96,000 jobs in August, and the unemployment rate had dipped slightly to 8.1%. Regalia noted that a deeper dive into the numbers showed that more than 360,000 people had voluntarily chosen to opt out of looking for a job—a sure sign that the economic policies that have been implemented in Washington are failing both employers and the American worker.
Regalia was joined by Randy Johnson, Chamber senior vice president of Labor, Immigration and Employee Benefits. Johnson explained that even in tough times, American employers have been meeting the healthcare needs of their employees, even as costs continue to rise. Some 170 million American workers received healthcare benefits from their employers in 2010, the last reporting year available, and employers spent nearly $1.56 trillion on employee benefits. Johnson also pointed out that, despite reports to the contrary, approximately three-fourths of employees receive paid time off.