Traverse City Record-Eagle

Archive: Tuesday

October 30, 2012

Economic ills may defy next president

Survey of economists paints cautionary message of struggles

WASHINGTON (AP) — Whoever wins the U.S. presidential election will likely struggle to manage the biggest economic threats he'll face.

That's the cautionary message that emerges from the latest Associated Press Economy Survey.

Europe's recession will persist deep into the next presidential term, according to a majority of the 31 economists who responded to the survey. A weaker European economy would shrink demand for U.S. exports and cost U.S. jobs. Yet there's little the next president can do about it.

An even more urgent threat to the U.S. economy, the economists say, is Congress' failure so far to reach a deal to prevent tax increases and spending cuts from taking effect next year and possibly triggering another recession. Yet as President Barack Obama has found, the White House can't force a congressional accord.

And whether Obama or his Republican challenger Mitt Romney wins Nov. 6, he'll likely have to deal with one chamber of Congress led by the opposing party. Polls suggest the Senate will remain in Democratic hands after the election and the House in Republican control.

"It's not like there's a clean slate for someone to do what they want," says Joshua Shapiro, chief economist at MFR Inc.

Still, there are some ways in which the economists think the White House will be able to drive the economy.

The next president, for example, could help lift growth and reduce unemployment by backing lower individual and corporate taxes and looser business rules, more than 70 percent of the economists say. They think such policies — the core of Romney's economic message — would be more likely to help than would Obama's plans for more spending on public works and targeted tax breaks for businesses.

Only about one in five of the economists say Obama's policies would be more likely to help spur growth and reduce unemployment.

The economists were surveyed before the government estimated Friday that the economy grew at an annual rate of 2 percent in the July-September quarter — too slowly to spur rapid job growth.

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