Economists express their concern for current economic climate
Updated: Updated 08/10/2012 05:32 PM
By: Adam Rhew
CHARLOTTE - The North Carolina Bankers Association said that politicians need to do something in order to jump start the economy.
“I think the uncertainty in Washington over the political scene has a great deal to do with uncertainty of the country and it's holding back the economy," said Harry Davis, the association's economist and professor at Appalachian State University.
In a new report, Davis said that there are just too many question marks about the political situation in Washington, leading to a lack of confidence and a reluctance to spend.
"The businesses won't invest in plant and equipment and workers and that's why we have very little employment growth," said Davis.
The group said that businesses are sitting on more than $2 trillion in capital, the most in 50 years. Davis said that until we know who the president will be, which party controls the Senate, and what the tax code will look like, that money will stay put.
"That flux in Washington adds to uncertainty in the minds of business people and their willingness to invest money in the economy," said Davis.
Political scientists said that this fall’s election might not make a difference, no matter who is in power.
"Gridlock is going to be with us because they're not going to have 60 votes in the Senate," said Catawba College professor Michael Bitzer. "Things are going to continue to come to a standstill and that's only going to create more uncertainty for the business community."
Bitzer said that gridlock is a fact of life in this highly polarized society.
"When it's a 50-50 split, it's going to be that kind of polarization and this is something I think we're going to be stuck with for some time."
Economists say the country’s financial situation is unlikely to change much between now and November’s election. The economy is overwhelmingly the top issue for voters surveyed in public opinion polls.
That means business leaders can’t wait on a magic sign from Washington to start spending that money.
I think they're going to have to make that decision on their own,” said Bitzer. “I honestly don't think they're going to be able to look to Washington.”
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