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U.S. economy improving, but recovery is lagging

Although the U.S. economy has improved since the recession, the recovery is still lagging, says Dr. Martin Regalia, the U.S. Chamber of Commerce’s senior vice president for economic and tax policy and chief economist.

Speaking to more than 75 middle-market CEOs at the Greater Cleveland Partnership’s Fourth Quarter Middle-Market Forum last week, he described the economic picture as “glass half-full/glass half-empty.”

Half-full indicators include:
  • Six years of steady growth
  • Housing essentially recovered
  • Financial sector recovered
  • 11 million new jobs since start of recovery
  • Household net worth recovered
  • Corporate profits reasonably strong
  • Budget deficit halved
Half-empty indicators include:
  • Budget deficit still historically large and poised to increase
  • Flat real wages
  • Business investment in equipment flat Y/Y
  • Real GDP slowest recovery in 80 years
  • A persistent negative output gap
  • Potential growth slowing
Looking ahead, Regalia said the impact of the slow recovery will continue to be felt due to several concerns including:
  • End-game regulatory surge
  • Cloudy international picture
  • U.S. monetary and fiscal policies
“Over the long haul, people won’t have the opportunities they once did,” Regalia said. “Businesses aren’t hiring because they can meet the current demand with the workforce they have.”

He added that the next president is very likely to have to deal with an economic downturn.

Improvement can come with changes

The economy could improve, Regalia said, with changes that include:
  • Infrastructure investment
  • Education reform
  • Comprehensive tax reform
  • Energy market reform
  • Immigration reform
  • Entitlement reform

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