The economy is not sliding back into recession, but GDP will only expand at an annual rate of 2% to 2.5% until the housing market recovers, according to Martin Regalia, senior vice president–economic and tax policy for the U.S. Chamber of Commerce.
Speaking Tuesday to the AICPA governing Council in Phoenix, Regalia, the chamber's chief economist, highlighted three primary points.
First, the economy cannot climb above current growth levels without a resurgence in housing. At current growth levels, high unemployment will continue. “We’re creating a chronically unemployed population whose skills are eroding on a daily basis,” he said.
Second, inflation will limit the Federal Reserve’s ability to continue current zero-interest monetary policy. “The inflation picture—while OK—is not getting better and showing signs of cracking,” he said.
Third, government budget issues will continue to put a damper on economic growth. “The only way we’ll be able to address the budget deficit is to address entitlement programs and taxes,” said Regalia. “Don’t expect either of these to happen in the next 13 months.”
—Matthew G. Lamoreaux ( firstname.lastname@example.org ) is a freelance writer.
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