For the fourth quarter in a row, the nation's top economics bloggers have conveyed a steadily deteriorating view of the U.S. economy in responses to a Ewing Marion Kauffman Foundation survey released today. In the fourth Kauffman Economic Outlook: A Quarterly Survey of Leading Economics Bloggers respondents' outlook on the U.S. economy is more pessimistic than in any previous quarterly survey in 2010, with 99 percent saying that conditions are mixed, facing recession or in recession. When asked about the probability of a double-dip recession in the United States, the average response is a 41 percent probability; two-fifths see a 20 percent probability, and opinion declines toward higher probabilities.
"It is not surprising to see such a diminishing outlook in the fourth quarter. Economics bloggers started the year hopeful for a summer recovery, but that obviously hasn't developed," said Tim Kane, senior fellow at the Kauffman Foundation and author of the study. "In our previous surveys, bloggers showed uncertainty about whether we would see a normal recovery or one that would last years, but clearly the experience of the last three months points toward the latter."
While the majority of bloggers in all 2010 surveys has consistently believed that the U.S. government is too involved in the U.S. economy, this quarter they were asked about the impact of the $868 billion dollar federal "stimulus" enacted in 2009. A majority of economics bloggers (62 percent) in this survey believes the unemployment rate would be higher today if the stimulus package had never passed.
Promoting entrepreneurship is an area with bipartisan support, so the survey asked bloggers to evaluate two different approaches. Only 37 percent agree with a more traditional policy of "subsidizing new firm formation with targeted spending and tax benefits" with 63 percent disagreeing (28 percent strongly). The alternative option to "reduce regulatory burdens and fees on new firm formation" is favored by 82 percent of respondents. Rather than recommending the government get more involved in helping entrepreneurs, top economics bloggers recommend it simply do less to hinder them.
"We know that entrepreneurship is the key to long-term growth as well as job creation, but these results give a very clear signal to policymakers about the best way to actually generate more American entrepreneurship," said Robert Litan, vice president of Research and Policy at the Kauffman Foundation. "It's all about lowering barriers to the formation and growth of new scale businesses."
Research highlights include:
- The bloggers remain skeptical about official economic statistics, though not as negative as the third quarter. This may be explained by the weak employment data that were reported during the late autumn months. Regardless, only 9 percent think the U.S. economy is doing better than official statistics indicate.
- The number of panelists expecting more rapid inflation exceed by a seven-to-one margin over those predicting disinflation. Sixty-two percent anticipate higher budget deficits, which is consistent with the strong majority (6-1) anticipating higher real interest rates. The outlooks for employment and GDP per capita growth are net positive, but muted with one-third expecting stagnation for both variables.
- The only group bloggers rate less favorably than Wall Street firms (with 12 percent As and Bs) is the U.S. Congress (no As and one B). Forty-eight percent give Congress an F this quarter. Nearly one-quarter of economics bloggers give the Federal Reserve an F, which also has the second highest A grades (6 percent).
- In every category of business, conditions right now are rated as "fair, bad or very bad" by 90 percent of respondents.
The fourth Quarterly Outlook also features questions from individual economics bloggers. Felix Salmon (Reuters) asked what income qualifies an American citizen as being rich. Half of the panel think "rich" in America ranges from $250,000 to $500,000 in annual income. Bryan Caplan (EconoLog) asked whether children represent a positive or negative externality (i.e. their potential cost-benefit impact on the world), and seven out of 10 economics bloggers said yes, each additional child is a net plus. James Hamilton (Econbrowser) asked bloggers about the probability of a double-dip recession, and Mark Thoma (Economist's View) asked how much of an impact the economic stimulus package had on unemployment.
Eight core questions and four topical questions were designed in coordination with a distinguished board of advisors, which includes:
Robert X. Cringely – I, Cringely
Brad DeLong – Grasping Reality
Laurie Harting – Palgrave's EconoLog
Paul Kedrosky – Infectious Greed
Lynne Kiesling – Knowledge Problem
Donald Marron – DMarron.com
Mark Perry – Carpe Diem
Wade Roush – Xconomy.com
Allison Schrager – Free Exchange
Nick Schulz – The Enterprise Blog
Yves Smith – Naked Capitalism
Alex Tabarrok – Marginal Revolution
Mark Thoma – Economist's View
The Kauffman Foundation sent invitations to more than 200 leading economics bloggers as identified in the Palgrave's econolog.net December 2009 rankings for the Kauffman Economic Outlook survey. The Foundation surveys the bloggers each quarter about their views of the economy, entrepreneurship and innovation.
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