By Dees Stribling, Contributing Editor
According to an Associated Press survey of 38 economists released on Monday, those economists are feeling less optimistic than they did only two months ago. Their new estimate (on average) of U.S. economic growth in 2011 is 2.6 percent, compared with the 2.9 percent that they expected in April.
The economists also expect job-creation for the year to slow down, to a total of 1.9 million positions for all of 2011, as opposed to the 2.1 million they expected two months ago. They also predict that the official unemployment rate will be 8.7 percent at the end of the year; at the moment, the rate’s 9.1 percent. Not so long ago, the respondents were predicting 8.4 percent by the time 2012 is rung in.
Thirty-six out of 38 of the respondents said that a hypothetical QE3, or really any more major moves by the Federal Reserve to stimulate the economy, would be counterproductive. They warned of ruinous effects of more Treasury-buying by the central bank, such as asset bubbles and galloping inflation. The economists are recommending that the Fed (metaphorically) sit back with a cigar and some brandy and not stimulate the economy for a while.
Jobs council recommends non-stimulus employment stimulus steps
President Obama met with his 26-member Council on Jobs and Competitiveness (a C-suite group) on Monday in North Carolina, but didn’t make any major policy announcements afterward. Still, most everyone was certain that the president has jobs on his mind, his own included after 2012, and the council made some jobs proposals public–arguably low-hanging fruit in terms of spurring new jobs (but don’t call it a stimulus).
Among other things, the council recommends that the federal government–the executive branch, as it happens, can take these steps–streamline permitting for construction already being funding by the government; make it easier for foreign tourists to obtain U.S. visas, so they’ll spend money here; have the Small Business Administration offer more loans; and speed up the effort to upgrade government buildings for energy efficiency. The president mentioned that last one while visiting a maker of energy-efficient lights in Durham.
Writing in Monday’s Wall Street Journal, two members of the council, Jeff Immelt and Ken Chenault–the CEOs of GE and Amex, respectively–say, “First, we need to focus on fast-growth companies and small business. Second, we need to make America the most attractive place on Earth for high-tech services and manufacturing jobs and to accelerate foreign direct investment in the U.S. Finally, we need to address the competitiveness of America’s infrastructure.”
S&P downgrades Greek debt
To paraphrase the Homeric maxim, the message from rating agencies might be, beware of Greeks bearing debt. On Monday, Standard & Poor’s downgraded Greece’s long-term sovereign credit rating to CCC, which is just above the dreaded D: default. It means that a “credit event” is dead ahead. No other country that has sovereign debt ratings–which leaves out the likes of North Korea or Zimbabwe–has a lower rating from S&P.
The Greek government wasn’t particularly happy about the move. Or at least the country’s finance ministry put on a brave face when it said in a statement that “the decision… overlooks the government’s moves to avoid any problems relating to Greece’s contractual obligations, as well as the will of all Greeks to plan our future inside the eurozone.” Still, some Greeks must be feeling nostalgia for the time when a crisis like this could be fixed by a timely devaluation of the drachma.
Wall Street had a ho-hum day on Monday, perhaps with investors waiting for the other shoe to drop on whatever crisis du jour has them upset. The Dow Jones Industrial Average ran in place, ending up 1.06 points, or 0.01 percent, while the S&P 500 eked out a 0.07 percent gain. The Nasdaq dropped 0.15 percent.