Inaction Would Slower Economic Growth

Congress needs to have a concrete plan to tackle slower growth, rising unemployment rate, and deficit increment as inaction from their part may slower the economic growth further, a board of economists told officials on Tuesday.

The same group of economists testified at the Senate Budget Committee. They say the economic growth in 2011 would be gloomy, and the annual GDP would range anywhere between 3% and 4%.

Most economists believe it’s a very slow economic recovery. ‘It’s probably one of the slowest recoveries we have had since World War II’ said Simon Johnson, lecturer at Technology’s Sloan School of Management.

However, Joel Naroff, founder and president of Naroff Economic Advisors, is not very sure about the mediocre growth. He believes, if Washington doesn’t act quickly and fail to make major changes in monetary policy and fiscal policy, the economic growth would be lower than 2.5%.

Most believe Congress needs to take immediate steps to maintain decent growth statistics. The government especially needs to reshape the tax system.

The fear that Congress wouldn’t take any decisions pertaining to extending Bush-era tax system until elections in November can infuse instability in the economy. Tim Geithner, Treasury Secretary, said on Tuesday that not many people are expecting any actions from Congress for tackling economic instability until elections.

In the past few months, sluggish tax policy was one of the main reasons why consumer confidence fell in the country. Besides, uncertainty in other policies like Wall Street and Health Care reform also plays a parting the falling consumer confidence level. However, tax policy is one of the main ingredients.