Economists Regard Current Fiscal Policy As “Too Stimulative”

Feb. 27, 2018
A majority of the NABE Policy Survey panel considers current fiscal policy “too stimulative.”

The February 2018 NABE Policy Survey, which summarizes the views of 211 members of the National Association for Business Economics (NABE), shows a shift in attitude toward current fiscal policy. According to NABE Vice President Kevin Swift, CBE, chief economist, American Chemistry Council, a majority of the panel considers current fiscal policy “too stimulative,” a departure from the view in August 2017 that the policy was “about right.”

“Overall, the panel expects the deficit to grow as a percentage of the economy in the longer term,” says Swift. “Survey respondents are more supportive of current monetary policy, with more than six in 10 reporting that the Federal Reserve’s policy is ‘about right.’ Indeed, the percentage holding that view is the highest in eight years.“

Two thirds of the panel rank the recently enacted Tax Cuts and Jobs Act superior in terms of impact on equity and efficiency to the previous corporate tax system, but nearly half regard the individual tax provisions as worse than before, according to Survey Chair Jim Diffley, CBE, executive director, IHS Markit. He adds that while respondents expect a near-term boost to economic growth, the view is less rosy regarding long-term results.

“On other economic policy matters, most respondents believe the Trump administration’s deregulatory actions will have a positive impact on the U.S. economy,” says Diffley, “Although executive actions regarding immigration and trade are expected to have unfavorable impacts. In addition, the panel places a low probability that any meaningful infrastructure package will be enacted in 2018.”

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