The agreement reached by Congress this week regarding the fiscal cliff won’t boost economic or job growth, says Peter Morici, a professor at the Robert H. Smith School of Business at the University of Maryland and former chief economist at the U.S. International Trade Commission.
“The tax and spending package passed by the Senate and House provides little prospects of improvement, as the U.S. economy continues to suffer from insufficient demand and will continue growing at a subpar 2 percent a year,” he writes in a commentary.
On the employment front, economists surveyed by Bloomberg offered a median forecast of a 150,000 payroll increase in December, leaving the jobless rate at 7.7 percent.
Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown
“Job growth around 150,000 is a decent way to end the year,” Ryan Sweet, an economist at Moody’s Analytics, tells Bloomberg. “Businesses are worried, but not panicked.”
Still, that’s nothing to crow about, Morici says. The economy must add more than 356,000 jobs a month for three years to trim unemployment to 6 percent. And that won’t happen without economic growth of 4 to 5 percent, he notes.
“Without better trade, energy and regulatory policies and lower healthcare costs and taxes on small businesses, that is simply not going to happen.”
Previous policies that increased business regulations and healthcare costs won’t help. “[A]nd now higher taxes on small businesses discourage investments that raise productivity and competitiveness and create jobs,” Morici states.
Editor's Note: The ‘Unthinkable’ Could Happen — Wall Street Journal. Prepare for Meltdown
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