Tags: Economic | policy | uncertainty | business

Policy Uncertainty: The Biggest Obstacle for Business Now

By    |   Wednesday, 08 August 2012 12:57 PM

The constant complaint from businesses about the uncertainty of government economic policy made Geoff Colvin, Fortune’s senior editor at large, a tad skeptical.

“Life is uncertain,” he writes. “Is this moment really different?”

The answer is clear. “Actually it is,” Colvin says.

Editor's Note: The Truth About the Economy — Government Documents Lead to Eerie Conclusion

“Economic uncertainty, especially policy uncertainty, is greater than it has been in many years. And if you're wondering why the U.S. economy is barely moving or why millions of workers can't find jobs, extraordinary uncertainty is a major part — maybe the largest part — of the answer.”

The proof is in the numbers. An index of policy uncertainty among business leaders, created by economists at Stanford and the University of Chicago, shows that the uncertainty has risen during the past few months to the highest level in 25 years, Colvin write.

Tax and regulatory issues rank as the biggest areas of concern for executives, according to the index.

Personal income tax rates will rise if Congress doesn’t act before the end of the year. And while many legislators have talked about cutting corporate tax rates, no action on the issue appears imminent.

On the regulatory side, the 2010 healthcare and financial reform laws are adding to business’ uncertainty.

The picture could become more clear if Mitt Romney wins the presidency and both the House and Senate are under GOP control.

But any other political scenario probably means continued policy gridlock, as Democrats and Republicans remain at war with each other.

Editor's Note: The Truth About the Economy — Government Documents Lead to Eerie Conclusion

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