Economic Commentaries

Entries for February 2016

05

As the old year ended and a new one begins, the economy and financial markets grapple with three basic domestic issues. These are prospects for fiscal policy; the machinations of voter preferences for the next President; and the Federal Reserve's policy prescription as it affects economic growth and interest rates. None of these seem favorable.

On fiscal policy a compromise omnibus spending bill was passed late last year, avoiding any near term government shutdown. But in doing so lawmakers offered a modicum of fiscal stimulus by agreeing to abandon the sequester caps imposed by the 2011 Budget Control Act. So much for fiscal discipline while nothing was accomplished on the important issues of tax and regulatory reform that might actually aid economic growth.

On the political front it hardly seems likely that tax and regulatory issues will be addressed this year. Indeed, on the democratic side if anything candidates are promising more taxes and more regulation. The republican field remains wide open with fringe candidates exhibiting considerable staying power. Republicans might address tax and regulatory reform in a new administration but concerns over governance could be unnerving.

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Posted in: General