Accessibility links

Survey Shows Uncertainty Slowing US Job Recovery

A new survey by business economists paints a mixed picture of the US recovery. In the poll by the National Association of Business Economists (NABE), the nation's leading economists give high marks to the Federal Reserve's monetary policy but says the lack of clarity on taxation and on new government regulations is making companies less willing to hire. The survey comes as investors await a key report on US employment.

After a disappointing month for traders, upbeat economic reports from China, Australia and the United States sent stock prices sharply higher.

But some believe the good news may be shortlived. Despite better than expected manufacturing numbers - American companies are reluctant to hire new workers.

A survey by a leading economic group lists uncertainty over the impact of new financial regulations and health care reform as major reasons.

"All of those make it uncertain to the business community about the cost of hiring someone, whether the rules of hiring someone are going to change. So their number one thing was, if you want to see job growth, then clear up the planning horizons so businesses know how they are going to make money when they hire people," said Economist Doug Duncan, a board member at the National Association of Business Economists.

Of 242 economists surveyed, three quarters said promoting economic growth is a higher priority than cutting the deficit.

Although the same number believes another stimulus is unnecessary, more than half say the government should not raise taxes on wealthy individuals.

"If you are more worried about getting out of the recession than in balancing the books for the government then that would push you in the direction of saying let's not raise taxes on dividends. Let's not raise taxes on higher earning individuals because those tax increases tend to reduce economic activity," said economist Max Fraad Wolf.

While the Federal Reserve gets praise for its monetary policy, there was disagreement on how long the Fed should keep interest rates low.

With the US economy slowing to 1.6 percent in the second quarter, German trader Oliver Roth says investors are concerned the world's largest economy could slip back into recession. "Right now, everything is fine but sooner or later we would have problems with the American economy in a double-dip situation because Americans are the engines of the world economy," he said.

Friday is expected to bring more clarity. That's when the Labor Department releases its monthly employment report. Preliminary data suggests the U.S. jobless rate rose .1 point to 9.6 percent in August.