Tags: Blitz | Economy | us growth

Blitz: Economy Downshifting to First Gear From Second

Tuesday, 14 August 2012 08:26 AM

The economy isn't stalling, but it's getting close, said Steve Blitz, chief economist at ITG Investment Research in New York.

The economy started off the year on a healthy note, although consumers have cut back on spending, companies have put plans to invest and hire on the shelf and the economy has cooled its growth.

Big gains in hiring early in the year were the product of warm winter weather and not a fundamental strengthening of the economy.

Editor's Note: Prophetic Economist Warns: “It’s Curtains for America.” See Evidence.

Politics has hampered confidence, as well.

Furthermore, at the end of the year, tax breaks expire while preprogrammed government spending cuts kick in, a combination known as a fiscal cliff that could derail an already tepid recovery if left unchecked by Congress.

Lawmakers have said they can address the cliff after elections or even in early 2013, though consumers and businesses will remain wary until then, which is hampering recovery, economists have said.

“You’ve got more forces pulling growth down than pushing it up,” said Blitz, according to MarketWatch.

“We’ve downshifted from second gear back to first.”

Other experts agree the economy may not be puttering out but is getting awfully close, especially considering the global economy is cooling and putting demand for U.S. products and services abroad on ice.

“What is different is what’s going on in China, India and South America,” said Brian Kropp, a managing director at the Corporate Executive Board, an Arlington, Va.-based consulting firm, MarketWatch added.

“The opportunities are not as attractive as they were a few years ago. Executives don’t see any markets that seem very compelling.”

The U.S. economy grew 1.5 percent in the second quarter, according to preliminary government reports released in late July.

That's not enough to make a dent in high unemployment rates, which rose to 8.3 percent in July from 8.2 percent in June.

"Unless growth can move above 2 percent — a rate consistent with population and productivity growth — the economy will not generate enough new jobs to bring down the unemployment rate," said Chris Jones, an economist at TD Economics, according to USA Today.

Editor's Note: Prophetic Economist Warns: “It’s Curtains for America.” See Evidence.

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