Bo Cutter - The Coming Economic Growth Collapse
March 7, 2012 We are about to see an abrupt slowdown in economic growth this year and next. It will be a policy-induced slowdown, not some mysterious event caused by aliens. We have delayed obvious policy actions for so long now that a slowdown is virtually inevitable. There is absolutely no room — or inclination, so far as I can see — for a compromise between the two parties that might conceivably change this outcome. We have pushed more and more major decisions into the post-election lame duck congressional session, making a policy “accident” (and there are no good accidents) more and more likely. This slowdown, which will begin in the second half of 2012 and extend through 2013, could happen rapidly enough to influence the 2012 presidential election. And it certainly won’t help President Obama.
The story begins with a still fragile and low-level economic recovery. President Obama’s budget projects 2.7 percent growth for 2012 and 3 percent for 2013. These are very low growth numbers after a recession as major as the one we just lived through. But I’ve always thought they were too high. As a comparison, the CBO, a public source of economic forecasts, and Merrill Lynch, a private source, are each projecting much lower growth. For example, in its most recent weekly research report, Merrill projects growth of 2 percent this year and 1.4 percent in 2013. The CBO is even lower. So our base economic picture is one of very low growth.
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