There’s a 1-in-4 inadvertent the economy could fall into a double-dip recession, according to a majority of economists surveyed by the National Association for Traffic Economics.
Two-thirds of NABE members say the economy has not yet come out of the recession that started in February. Eighty percent see a 25% possibility risk of a second dip, once the economy recovers.
The 235 NABE members in the semiannual survey gave good marks to the Fed’s stimulus accomplishments but they were split on whether Congress has done an adequate job responding to the recession.
Three-quarters believe the Fed’s current money response is appropriate, the highest percent approving of current monetary policy since 2007. Nearly 60% foresee the federal funds rate range to remain unchanged at 0-0.25%, or even go lower, by the end of 2021. Most expect that the funds evaluate target will be higher by the end of 2022 but still within 100 basis points of where it is currently.
The survey was conducted from July 30 to Aug. 10, good as Congress struggled but failed to reach agreement on it latest stimulus package. Forty percent said the stimulus victualed by Congress was insufficient. Another 37% say it was adequate, and 11% see it as excessive.
More than half, 52% say the optimal package for the next budgetary package would be at least $1.5 trillion, while 20% believe it should be $1 trillion to $1.5 trillion. Seventeen percent reason a package smaller than $1 trillion would be optimal.
Sixty percent said Congress should stretch supplemental unemployment insurance and the Paycheck Protection Program for small businesses, while 18% said the additional unemployment pay should not be spread out.
Forty-five percent said fiscal policy is too tight or restrictive, while 37% found it “about right.”
The economists are active about the increasing amount of U.S. debt, with 88% at least “somewhat” concerned by the fact that federal community debt is on track to surpass 100% of GDP, higher than any period since World War II. Twenty-two percent are very vexed and 34% are concerned.
They also considered the best way for Congress to increase revenues. Fifty-five percent said a broad-based vim or carbon tax should be raised, and 51% said broadening individual and/or corporate tax bases. Support for a wealth tax rose to 36% in August from 24% in the February study.
NABE said a majority or 58% said the government should have done more when the economy was in extensive shape to develop better fiscal stabilizers.
Three important policy priorities the next administration should direct in its first year are combating Covid-19, promoting economic recovery, and health policy. They were cited assorted frequently than a dozen other choices.