Tags: rosenberg | austerity

Fiscal Austerity at State and Local Level Impresses Rosenberg

By    |   Thursday, 21 Jun 2012 09:06 AM

David Rosenberg, chief economist at Gluskin Sheff, has stood out for his bearishness on the U.S. economy since the 2008-09 financial crisis.

But now he’s changing his tune a bit, thanks to the adoption of fiscal austerity by state and local governments.

“I’m not turning bullish,” Rosenberg tells Yahoo. “But I am starting to see a flicker of light at the end of the tunnel."

The good news starts on the political side, he says. Wisconsin voters voiced their approval for the austerity policies of Republican Gov. Scott Walker in returning him to office earlier this month.

In San Diego and San Jose, meanwhile, voters overwhelmingly approved limits on payouts to public workers.

"Austerity is not a dirty nine-letter word," Rosenberg says. "Austerity means living within your means and paving the way for your next generation not to be saddled with excessive debt.”

One reason why states and municipalities haven’t suffered a wave of bankruptcies, as some experts predicted, is this willingness to clean up their balance sheets, Rosenberg says.

“Europe still has to figure that out.”

But not everyone sees government austerity as a good thing.

The public work force is 1.4 million people smaller than it would be if it kept growing at its pace under President George W. Bush, economist Paul Krugman writes in The New York Times. And that would have put unemployment at 7.3 percent rather than May’s 8.2 percent level, he says.

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2012-06-21
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