From the Daily Record
Maybe you haven't noticed, but the U.S. economy has been in a recovery stage for almost 41/2 years since the "Great Recession" ended.
"It doesn't feel like we've been in recovery for four and a half years," said Sean Snaith, director of the University of Central Florida's Institute for Economic Competitiveness.
"Why is it so weak? Why has it been this way?" Snaith asked at an Economic Roundtable of Jacksonville luncheon last month at Jacksonville University.
He believes that continued uncertainty is weighing down economic growth.
Snaith said he's considering writing a novel about economic uncertainty called "Fifty Shades of Gray."
The gray is the color of the clouds hovering over the economy. "The novel's a joke, but uncertainty is not," he said.
Snaith said a trio of economists from Stanford University and the University of Chicago have developed an "economic policy uncertainty" index to quantify the level of uncertainty that is affecting the country.
Snaith said the index over the years shows that uncertainty usually declines when a recession ends but since the last recession ended, uncertainty has actually risen.
This uncertainty leads to lower private investment, lower industrial production and "much lower employment," he said.
One piece of uncertainty affecting business decisions was removed a year ago when the U.S. presidential election was decided, but several issues still remain, he said.
Health care and financial reform are two issues that are leaving businesses hesitant to move forward, Snaith said.
The Affordable Care Act mandate that companies with more than 50 full-time employees provide insurance for workers is already having an impact, he said.
Another federal law creating uncertainty is the Dodd–Frank Wall Street Reform and Consumer Protection Act. As financial institutions wrestle with new regulations, they have responded by reducing credit flows, making it difficult for economic expansion.
The continued negotiations over federal budget issues are also creating uncertainty. Snaith doesn't view the constant deadlines and threats as a "fiscal cliff," which would send the economy off the deep end, but instead he sees a "fiscal flight of stairs" as the country bounces from one step to the next.
"It's never stopping," he said, and the continuing short-term fixes don't address long-term issues like entitlements that would remove some uncertainty.
One issue that's out of the U.S. government's control, the fate of the euro currency in European countries, is another issue of uncertainty for U.S. businesses, he said.
While these uncertainties are affecting business decisions, a major factor affecting consumer behavior is household wealth, Snaith said.
While the stock market has recovered its losses from the recession, more people have been impacted by the drop in housing prices. That market still has a way to go to rebound to pre-recession levels and it's weighing on consumers' minds.