Top economics bloggers are feeling a renewed sense of pessimism about the U.S. economy, according to a new Ewing Marion Kauffman Foundation survey released today. Sixty-eight percent of economics bloggers who responded to the mid-July survey described the economy’s overall condition as “mixed,” with the rest split three to one toward an assessment of “weak” rather than “strong.” Worse, only 5 percent of respondents believe the economy is “better than official government statistics show,” while 47 percent think it is worse.
For this third Kauffman Economic Outlook: A Quarterly Survey of Leading Economics Bloggers, the Kauffman Foundation sent invitations to more than 200 leading economics bloggers as identified in the Palgrave’s econolog.net December 2009 rankings. (NOTE: I was one of the bloggers surveyed). The Foundation surveys the bloggers each quarter about their views of the economy, entrepreneurship and innovation.
“Uncertainty is casting a shadow over the economy as well as the debate about the economy,” said Tim Kane, senior fellow at the Kauffman Foundation and author of the study. “There is good news in the forecast, but it seems to have left the country. Expectations of global growth are more than double the projection for U.S. incomes. And bloggers’ frustration with Congress seems to have hit a boiling point as well, yielding a grade point average of 0.8 on a four-point scale, which is roughly half the grade point given to Wall Street firms.”
Research highlights include:
- None of the respondents assessed the U.S. economy’s overall condition as “strong and growing.” Overall opinion has shifted sharply negative since the previous quarter. Many bloggers acknowledged the possibility of a double-dip recession in response to a question from Econbrowser.com’s James Hamilton: the average probability among respondents was 44 percent.
- The bloggers expect the U.S. budget deficit to grow stronger than any other variable over the next three years. They also see higher poverty (doubled from second-quarter expectations) and inequality levels in the United States, meager stock market growth, and a slight decline in U.S. competitiveness. On a brighter note, three-year projections also include a relatively strong increase in global output.
- A large majority–70 percent–of the surveyed bloggers say the federal government is too involved in economic matters, despite the largely non-partisan identification of the respondents.
The response that gave me the biggest concern was about small business. A majority (57 percent) believe conditions for small business in particular are “bad” or “very bad.”
Not good news for entrepreneurship — the engine of economic recovery.
Dr. Cornwall,
I am surprised to see that 70% of respondents saw the government as overly involved in economic matters. That is a very broad statement, which could encompass fiscal stimulus, nationalization, and social safety programs.
While there may be a number of individual policies and programs that adversely affect small businesses, surely they don’t oppose the kind of stimulus measures taken in recent years to mitigate risk of systemic economic collapse?
I understand that the recovery is expected to be fueled by small business growth, but doesn’t that growth depend on the stability that can only be provided by the government, e.g., by an extension of unemployment benefits?