In a recent survey, 53 economists agreed that the economic outlook is grim but that Washington needs to back off.
The surveyed economists, not all of whom answered every question, predicted both lukewarm growth and high unemployment, The Wall Street Journal reported. As a group, they don’t believe the unemployment rate will drop below 9 percent until at least July of next year.
Many said any extension of the Bush-era tax cuts should be temporary, and 23 of those responding said the extension should be offset with spending cuts or other taxes.
Despite the continuing economic challenges they see, 30 out of 48 economists said the economy didn't need more fiscal or monetary stimulus, although most didn't support the idea of ending Bush-era tax cuts, which will expire at the end of this year unless Congress acts.
However, six economists said more fiscal stimulus was necessary, five want more monetary stimulus from the Federal Reserve and seven said that the economy could use both.
The survey was conducted before the Federal Reserve announced it will boost monetary stimulus by reinvesting proceeds from its mortgage-backed securities and agency debt portfolio into Treasuries.
The economists polled expect the economy would add a mere 136,000 jobs per month during the next 12 months, less than the 157,000 forecast in the July survey, a rate at which job creation will barely keep up with new entrants to the labor force.
Despite continuing worries about the huge U.S. deficit, more than half of the respondents — 28 economists — don't think the United States will adopt a value-added tax (VAT) over the next decade.
"Political pressure against it is too strong," said David Wyss of Standard & Poor's Corp.
A push to extend the Bush tax cuts is heating up in Congress with a debate about whether they should include the wealthy, the timesdaily.com reports.
The opposite poles presented by the growing deficit and shaky economy continue to challenge the nation’s greatest economic minds along with the politicians who depend on them for direction.
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