Economic growth

montra · Jul 17, 2011

http://www.bloomberg.com/news/2011-...ment-debt-levels-threaten-global-economy.html

"Nations historically have run into trouble when public debt exceeds 90% of the GDP, and it appears the US did and some European nations have surpassed that threshold......The biggest risk is that debt will accumulate until the overhang weighs on growth."

So has the US economy sunk itself in terms of potential economic growth due to its massive public debt? Is around 2% growth now the best that can be hoped for?

waltky · Aug 26, 2011

What to do, what to do?...

Weak growth. Monster debt. Which to tackle first?
Aug 25 2011 - As a forecast by the Congressional Budget Office shows, both threats to the economy linger. The good news is that the solution doesn't need to be either-or.

It's easy to read the latest budget outlook from the Congressional Budget Office as further proof that the United States really needs to get serious about dealing with the national debt. But if that's all that lawmakers take away, they will have missed a big point. The CBO is not in the business of telling Congress what to do. But it is in the business of showing Congress how what it chooses to do may affect the country's economic future. One of the big lessons in the latest CBO analysis is that lawmakers should tread carefully when deciding how to tamp down debt so as not to unduly upend economic growth.

The CBO believes economic growth in the next few years will be modest. That's assuming three big things: the Bush-era tax cuts would expire, resulting in bigger tax bills; spending cuts would be enacted as per the recently passed Budget Control Act; and stimulus measures -- such as extended unemployment benefits -- will have run out. If all that comes to pass, the agency estimates that growth in 2013 would be between 1.5% and 3.5% lower than would otherwise be the case.

Economic growth in the second quarter was slightly weaker than previously estimated.

That's not surprising. Given the already slow economic recovery and the fact that interest rates can't fall much farther, "reductions in government spending or an increase in taxes ... will slow economic growth and reduce employment," CBO director Douglas Elmendorf said in a meeting with reporters. At the same time, letting the debt grow unbridled can also hurt future economic growth. So what's a partisan-driven policymaker to do? Don't be a slave to ideology and apply a little finesse to your task.

"It's possible to structure deficit reduction in a way that does not have as large a dampening effect on output and employment in the near term while still achieving significant deficit reduction over the decade and the longer term," Elmendorf said. "That amounts principally to having the policy changes take place later." That is, policymakers could support near-term economic growth by increasing spending (or at least not cutting it) and lowering taxes (or at least not raising them).

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MissJonelyn · Aug 26, 2011

And to think this wasn't projected to happen for decades.

How time flies.

skeptic-f · Aug 26, 2011

MissJonelyn said: ↑

And to think this wasn't projected to happen for decades.

How time flies.
Click to expand...

Things haven't even begun to get bad yet. In a decade or two we will look back on 2011 with fond nostalgia for the good old days.

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Economic growth

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