Evaluating a Sluggish Economy with Bruce Yandle

CAPITOL HILL CAMPUS:

EVALUATING A SLUGGISH MID-YEAR ECONOMYBruce Yandle

June 2, 2016

2006-01-01

2007-01-01

2008-01-01

2009-01-01

2010-01-01

2011-01-01

2012-01-01

2013-01-01

2014-01-01

2015-01-01

2016-01-01

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

US Real GDP Growth2006 -2016

• Slow Growth or Recession?

• Geographic Impact?• Are Political Parties

Obsolete?

The June 2016 Situation

Cecil Turtle - Looney Tunes Wiki - Wikialooneytunes.wikia.co

Chronic Illnesses Affecting the Economy

• Low population and productivity growth– Aging, retiring population. Declining average

worker age.– Growing regulatory entanglement– Declining capital investment

• High and growing debt• Massive prison population• Massive illegal alien population

Four Gale Winds Affecting the Economy

1. Strong dollar—Low exports, slow manufacturing.

2. Slow China economy—Low exports, world commodity glut, slowing developing economies.

3. Falling energy prices—increased bankruptcies, slow petroleum export economies.

4. Crazy season—Rambunctious campaign promises, rising uncertainty, delayed capital spending.

Here’s the picture that I see for 2016: GDP growth for the year will hit 1.8%. 2015 GDP growth

was 2.4%. Interest rates will nudge up no more than 100 basis

points. Inflation will remain low. Construction material prices—lumber, wall board, steel—

will remain stable. Constrained by availability of skilled labor, construction

activity will hit a peak and hold. The pace of manufacturing activity will accelerate from

hardly moving to slow.

Put another way, this will be a ho-hum year for the nation, with wide variation across states and regions. And 2017 will look a lot like it.Welcome to the slow lane.

NASA. April – October, 2012.

The Geographic Imprint

Nationwide, 214 counties, or 7% of 3,069, had recovered in 2014 to prerecession levels on four indicators: total employment, unemployment rate, size of economy, and median home values.

County recovery as of 2014 relative to 1/2008.Employment, unemployment rate, GDP, median housing value.

Are Political Parties Obsolete?A Few Tentative Thoughts

In recent years, however, the parties’ entire role and therefore their power has been collapsing. If a candidate is clever enough and has something to say, he or she can get direct access to the media. As political entrepreneurs, most candidates now raise their own financing and depend on money from the parties less and less. Candidates form their own policy groups or court the flourishing idea forums that span the political spectrum. Self-confident and ambitious candidates put themselves forward for any office they desire, up to and including the presidency, without seeking the approval of party officials. Individual office-seekers form their own coalitions by shopping for support among the smorgasbord of interest groups.

Gary Hart, “The Parties are Over,” Huffington Post, May 11, 2011, http://www.huffingtonpost.com/gary-hart/the-parties-are-over_b_2058.html.

A Program for Direct and Proxy Voting in the Legislative Process

James C. Miller III, Public Choice, 7(1969) 107-113.

One marvels at the advancing technology of electronic computers, indicating devices, and recording equipment. Some, in fact, have predicted that within 20 or 30 years every home will have a console tied into a computer upon which the children do their homework, the housewife will make out her grocery list, and the husband will pay the family’s bills. Such a computer console also could be used to record political decisions, giving each voter an opportunity to cast his ballot on every issue and have it recorded through the machine.

Bridging the gap between academic ideas and real-world problems