Macroeconomic Growth in US

In this presidential election year of 1996, it is more than a little dangerous to make predictions concerning the future of macroeconomic growth in the United States. In addition to the (by-now-standard) "gridlock" between President and Congress concerning fiscal policy, there has been a record-length standoff between those same two branches of the federal government concerning the federal budget. The failure for so long to reach compromise represents either: (a) lack of political will/ability to find common ground, or (b) the inability of either branch to propose a coherent and workable macroeconomic blueprint for the future of the United States. The indicator numbers these days are encouraging: winter growth rates in new housing starts, reductions in unemployment. However, the reactions to this good news from "the market" (which, generally speaking, still means the New York Stock Exchange) have been confusing. Throughout March, stock market prices took dive after dive in the wake of what should theoretically have been positive economic indicators. Then, just as the analysts geared up to proclaim that "the bull" was being chased out by "the bear", the market was "revived" by new influxes of capital investment. At the Federal Reserve Bank, where monetary policy is fairly independent of direct political pressure, analysis of the current situation has been no less confounded. To this writer's mind, the very tight rein on interest rates that the chairman of the Federal

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sident Reagan captured the confidence of the public, and the trend of the economy during his tenure in office was one of upward, vigorous growth. One cannot say that either current President Bill Clinton or contender Robert Dole inspire Reagan-like confidence in their leadership. At the same time, however, both offer the business sector similar, pro-growth/anti-deficit attitudes toward federal fiscal policy. The business sector likes stability almost as much as it appreciates an aggressive, pro-business fiscal policy. Thus, unlike in 1980, when uncertainty played a major factor in eroding confidence, the American business community can assume with some assurance that there will be "more of the same" through to the year 2000. "More of the same" would be a clarion call to economic disaster, of course, if the current economic environment were not so stable - and, indeed, exhibiting a steady-if-unremarkable growth rate. Assuming that the current "crunch" on oil prices is only temporary and regional, there is no scarcity of resources right now. Both the North American Free Trade Agreement (NAFTA) and the General Agreement on Tariffs and Trade (GATT) have been in place for a few years now - and are beginning to show signs of th

Category: Economics - M