An organization for corporate economists, the National Association for Business Economics (NABE), published its bi-annual survey this morning, and the results contain a clear and unambiguous message to President Obama: Fix the deficit! Although there is a difference in opinion on whether the deficit is going to be worse in the next ten years or the ten years after that, there is a consensus that the deficit/debt is going to hurt this country’s economic future:
“An overwhelming majority of the NABE Economic Policy Survey panel believes that the projected deficits over the next few decades represent a principal challenge facing the nation, although there was no consensus among panelists who participate in the NABE Policy Survey regarding the appropriateness of fiscal policy at present,” said NABE Policy Survey Committee Chair Jay Bryson, Global Economist at Wells Fargo Securities. “Most panelists favor a mix of policy approaches that includes some form of spending restraint as the best way to address long-term deficits, with a plurality favoring a mixed approach of spending restraint and revenue increases.
“There continues to be greater consensus regarding the appropriateness of monetary policy, with a majority of the NABE panelists indicating that current monetary policy is ‘about right.’ About half of the panelists believe that the Federal Reserve will begin to wind down its asset purchase program by the end of the year, while the vast majority looks for the Fed to maintain its current target for the fed funds rate through the first half of 2014. There is significant support for the appropriateness of the Fed’s 2 1⁄2% inflation threshold, although there is no clear consensus about the appropriateness of the Fed’s 6-1⁄2% unemployment threshold.
Whether it is now, the next ten years, or the ten years after that, 92% of the business economists agree that the deficit is the principal fiscal challenge facing this country.
When asked, “What is the best way to address the current budget imbalance?” a small plurality (34%) responded that the best approach would be policies “to stimulate economic growth.” and 32% favored a combination of reduced spending and increased revenues.
Almost 20% of survey respondents indicated a preference for implementing spending cuts as the primary deficit reduction measure while 11% recommended no policy changes at present as they believe the present deficit is either not material or is not the primary economic challenge facing the nation.
More panelists believe projected deficits in the next two decades are more threatening to economic growth than the current deficit, and a plurality (39%) believes that a mix of spending restraint and increased revenues would be the best approach to address these deficits This policy approach was more popular among panelists than a policy that focuses primarily on spending restraint (cited by 32% of panelists) or one that focuses primarily on increased revenues (cited by only 2%). [Emphasis added]
The study also reported a broader agreement about monetary policy, as a majority of economists think the Federal Reserve’s current policy is “about right.” But the respondents widely diverged on when they think the Fed will stop its policy of buying bonds to prop up the economy.
About 39% of survey respondents think the Fed will begin slowing the program in the fourth quarter of this year. Some, about 7%, think it won’t happen until 2015 or later. About 39% think the Fed will wait until 2015 or later to begin raising its interest rate targets, its traditional tool for balancing economic growth with keeping inflation in check.
These economists seem to be disagreeing with the president’s policy of spending more and taxing more as a way of fixing out deficit/economic problems. Perhaps this means the entire panel faces an IRS audit, or that the president will spin these results to agree with his policies.
Before he does that make sure to read the entire report here and make up your own mind.