The Romney Recovery: How Long Will it Take?
Assuming that moving trucks will be backing up to the White House come January--and assuming Mitt Romney fully employs his five-point plan for economic recovery--how long will it be before economic recovery takes place?
Recall that Reagan had to sit through about two very difficult years before the economy turned upward; at one point in 1982 the unemployment rate reached 10%. Reagan, I think, had a disadvantage in that his policies of lower taxes and deregulation were considered novel at the time. Lenders and job creators had become conditioned to the Keynesian policies of post-FDR America, and few seemed willing to "go first" and invest in the perceived uncertainties of a laissez faire economy. I'm not forgetting the Kennedy tax cuts, but I don't recall the Kennedy cuts being a point of reference at the time. I welcome a more seasoned member of Ricochet to correct me on this point, if needed.
Fortunately for Romney, he has precedent on his side. With the Kennedy, Reagan, and Bush recoveries to back him up, not to mention a large portion of the populace that is better educated in the virtues of pre-Wilson, limited-government America than it has been since the '80s, and possibly before (thanks, largely, to the Tea Party Movement and the web for that).
My prediction--predicated on the notion that Romney is willing and able to do what he says within the first six months of his term--is that the economy will remain fairly stagnant until March/April 2014, which will mark the beginning of a long, steady recovery.
What's yours?
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Mar '12
Re: The Romney Recovery: How Long Will it Take?
The world is very different now than in 1980. Then, the US economy was relatively unaffected by the economies of the other countries. Now, with globalization, our economy can be significantly affected by problems overseas. Also, our debt was much smaller and government spending less as a percentage of GDP in 1980.
If Europe goes into recession, as is likely, and China slows dramatically, which is possible, our economy will find it difficult to grow. If Romney tries to cut the deficit through tax reform and spending cuts, our economy will also go into recession. If Iran gets the bomb or Israel strikes Iran, expect oil prices to soar and the economy to tank. It would take a perfect storm of serendipity for the conditions for a major economic rebound to occur.
In sum, I think the odds are the economy stagnates for the next 4-6 years.
Aug '11
Re: The Romney Recovery: How Long Will it Take?
Our current economic malaise is purely artificial. There is much economic vigor dammed up by Obama & Co. by legislation, executive orders, rules, and regulation. People are hoarding cash in response to this unwarranted federal intrusion in their lives.
The recovery will start as soon as Romney, Ryan and the Republican-controlled House and Senate (along with the smart Democrats) start pulling down this dam. A trickle of economic growth followed by a torrent when the dam breaks.
I have no time frame. It all depends on how long it takes the federal government to get the job done. Remember: Liberals love lawsuits. They will be challenging every step Romney takes in court.
Mar '11
Re: The Romney Recovery: How Long Will it Take?
I work in business, and I see how much money is sitting on the sidelines, terrified of being committed.
I think that if Romney acts quickly and decisively to:
1: Open up or relegate federal lands to the states
2: Remove union membership for all federal employees
3: Overturn Davis-Bacon
4: Hamstring and then replace Obamacare
5: Slash and burn regulations
Then I am quite certain we will see positive results almost immediately, and a roaring economy within 12-18 months.
Will a President Romney actually do these things? I hope and pray that he does!
Feb '11
Re: The Romney Recovery: How Long Will it Take?
iWc: I work in business, and I see how much money is sitting on the sidelines, terrified of being committed.
I think that if Romney acts quickly and decisively to:
1: Open up or relegate federal lands to the states
2: Remove union membership for all federal employees
3: Overturn Davis-Bacon
4: Hamstring and then replace Obamacare
5: Slash and burn regulations
Then I am quite certain we will see positive results almost immediately, and a roaring economy within 12-18 months.
Will a President Romney actually do these things? I hope and pray that he does! · 0 minutes ago
Removing the uncertainty allows planning. That is the key.
Politically it has to be in gear in time for 2014 elections, otherwise naysayers take over debate.
Mar '11
Re: The Romney Recovery: How Long Will it Take?
The price of oil is a (the?) major burden on the current economy. If a Romney administration presides over the free flow and refining of oil from federal land we'll all have more money to invest, and more desire to invest it. Not to mention all that natural gas, which doesn't require the time and expense of refining.
Edited on October 21, 2012 at 6:32pmApr '11
Re: The Romney Recovery: How Long Will it Take?
My main fear is that Romney is actually considering tariffs on China. If you want to understand why that would be a very, very bad thing, you need to understand why the Smoot-Hawley Act of 1930 had such a large impact on sending the US and the world into the Great Depression.
Mar '11
Re: The Romney Recovery: How Long Will it Take?
kesbar,
This is my fear as well. It is one point of his five-point plan that doesn't need to be there. Hopefully it is just political rhetoric, as dissing China always sounds good in a soundbite. Which leads me to wonder, what else is he saying that is just political rhetoric?
Edited on October 21, 2012 at 6:37pmAug '11
Re: The Romney Recovery: How Long Will it Take?
Agreed. For a more detailed view, see the Rees-Jones Uncommon Knowledge interview with Peter Robinson. (Do I get a free month on Ricochet for such shameless brown nosing?)
Agreed. Tariffs are for those who want to blame others for their own mistake. We can economically body slam the the People's Republic of China if only the federal government would get out of the way. I hope Romney and Ryan realize this.
Apr '11
Re: The Romney Recovery: How Long Will it Take?
Gus Marvinson: The price of oil is a (the?) major burden on the current economy. If a Romney administration presides over the free flow and refining of oil from federal land we'll all have more money to invest, and more desire to invest it. Not to mention all that natural gas, which doesn't require the time and expense of refining. · 15 minutes ago
Edited 15 minutes ago
The price of oil is a big part of the picture, but so is Obamacare. Hiring will take off if we can get rid of Obamacare. If we win the White House but not the Senate, that might be a heavy lift.
May '11
Re: The Romney Recovery: How Long Will it Take?
The first difference is that China already has huge trade barriers. They have already fired the opening barrage in the trade war. Smoot Hawley was perceived as a huge escalation rather than a retaliation.
The bigger risk may be secondary trade wars with other countries
Apr '12
Re: The Romney Recovery: How Long Will it Take?
23 million small businesses have been frozen with the mass of unknowns that seemed to coming down the pipeline. The health costs of one employee could mean no take home pay.
When Romney talks about corporations being people, most of these businesses are owned by one person. When Obama carelessly throws around what the added cost of health care could be, oh, and now add contraception costs too, no big deal, business owners see this leader does not have a clue of their pain. They wait him out.
Romney does understand off Wall Street business. He knows Main Street inside and out. 23 million business owners have put off buying computers, etc. They will trust in Romney and their animal spirits will get recharged.
Canada is Conservative and will do everything to get our economies flowing. We have been trying to work with China. The trust level is too low though. We would welcome back a pro business America.
May '11
Re: The Romney Recovery: How Long Will it Take?
The big problems will be the Senate and courts.
Mar '11
Re: The Romney Recovery: How Long Will it Take?
There's a lot of cash sloshing around, and if it starts to get spent or invested, inflation's going to take off like a Saturn V (although I'd submit it's already upon us in big way). The only way to stop it will be to either radically increase bank reserve requirements, which will put the brakes on lending, or raise interest rates. With a $16 trillion debt, if rates go up 1%, government's borrowing cost goes up $160 billion per year; if it trends back to historic rates of over 5%, that adds $600 billion to the budget. We're doomed.
Edited on October 21, 2012 at 7:50pmJun '12
Re: The Romney Recovery: How Long Will it Take?
Quite. If the Senate doesn't want to help, they can't be stopped, short of a 60-40 conservative majority. If the Senate refuses to act, the Bush Tax cuts go down in flames, neither laws nor budgets can be passed, Supremes can't be confirmed, and cats will sleep with dogs.
Jun '12
Re: The Romney Recovery: How Long Will it Take?
E. Blackadder
Quite. If the Senate doesn't want to help, they can't be stopped, short of a 60-40 conservative majority. If the Senate refuses to act, the Bush Tax cuts go down in flames, neither laws nor budgets can be passed, Supremes can't be confirmed, and cats will sleep with dogs. · 1 minute ago
That's when President Romney will have to take to the bully pulpit and explain that the pain the American people are feeling is entirely the fault of the Democrats in the Senate.
If memory serves, Reagan did similar things fairly often when Congress was being difficult.
Feb '12
Re: The Romney Recovery: How Long Will it Take?
As someone with no specialized economic knowledge, I can only say:
"Not a moment too soon."
Nov '11
Re: The Romney Recovery: How Long Will it Take?
I expect we'll see a general uptick in the economy almost immediately – starting in November. This will partly be a speculative bubble, followed by a slowdown, or even recession, starting in the first half of 2013. The MSM will credit the uptick to Obama, and blame the downturn on Romney.
The Senate will gum things up as much as they can. The outgoing Obama administration may poison the well with last-minute executive orders. The Bush tax cuts will be allowed to expire. This won't be catastrophic, but will somewhat dampen the initial uptick, and deepen the subsequent downturn.
After this quick up-and-down, I have no idea what will happen. So much will depend on what happens overseas, particularly in the EU, Middle East and China. Also, the Fed may start trying to remove some of the massive amounts of liquidity they’ve been injecting into the system.
The economy over the next 4 years should be significantly better under Romney than it would be under Obama, but that doesn’t mean it will be rosy. It may turn out to be downright bad, just not as bad as it could be.
Feb '11
Re: The Romney Recovery: How Long Will it Take?
There's a lot of capital that is sitting out the American market. The primary reason being fear of Obama unchained. I predict that capital will come into the market in short order if Romney signals clearly that he is keeping his promises to deregulate and tackle federal spending. With this we will see positive trends in short order, before the end of 2013. But we have lost so much ground under Obama, that it will likely take close to a full term to get back to where we were in early 2008. Nevertheless, the direction will be clear to all. Nancy & Harry will be reduced to complaining that the recovery is not fast enough and that public employees are being left out. (hee hee)
Additionally, the built-up inflationary pressures brought to us by one of the worse Fed Chairmen in history, will take much longer to work out. We can be helped with this if Romney pushes drill baby drill in America.
Ironically, all the above will make it more difficult to deal with the entitlement crisis. With the pressure off, those cans will be kicked down the road.
Apr '11
Re: The Romney Recovery: How Long Will it Take?
iWc: I work in business, and I see how much money is sitting on the sidelines, terrified of being committed.
I think that if Romney acts quickly and decisively to:
1: Open up or relegate federal lands to the states
2: Remove union membership for all federal employees
3: Overturn Davis-Bacon
4: Hamstring and then replace Obamacare
5: Slash and burn regulations
Then I am quite certain we will see positive results almost immediately, and a roaring economy within 12-18 months.
Will a President Romney actually do these things? I hope and pray that he does! · 7 hours ago
He promises to do 3, 4, and 5. Maybe 1 could be a second term matter? 2 is needlessly radical; removing union's political power is important, and is part of his platform, and limiting collective bargaining powers might help, but denying membership seems like it would hurt too much to be worth the gains.
Both sides of this thread are right; there's an enormous positive baseline for a Romney economy, but spending cuts and overseas recessions would be problems. Predictions are hard, particularly about the future.
Apr '11
Re: The Romney Recovery: How Long Will it Take?
ctlaw: The first difference is that China already has huge trade barriers. ......
The bigger risk may be secondary trade wars with other countries · 7 hours ago
If your concern is Smoot Hawley, then it might be helpful for you to read the trade section of Mitt's Jobs document. Mitt would pursue new trade agreements and aggressively open new markets to American products (making secondary trade wars unlikely). He's not a protectionist; he did pretty well in economics in his Harvard classes.
The actions against China aren't designed to increase wealth in themselves; they're an enforcement action designed to alter Chinese behavior. As he said in a debate, he doesn't want a trade war, but the Chinese want one even less. Free trade is important, but so is the protection of American companies from intellectual property theft.