NABE Economists Reject Current Monetary, Fiscal Policies

Aug. 22, 2016
Growing number of NABE economists see monetary policy as too stimulative and fiscal policy as too restrictive.

The latest National Association For Business Economics (NABE) Policy Survey shows less support for current monetary policy than in the March survey, with more respondents indicating that the current policy is too stimulative, according to NABE President Lisa Emsbo-Mattingly, CBE, director of research, Global Asset Allocation, Fidelity Investments. The survey covered a range of questions on fiscal and monetary policy, domestic economic policy and regulations and foreign economic policy and trade.

“A majority of respondents expects the Federal Open Market Committee to raise its target for the federal funds rate above the current 25-to-50 basis-point range by year-end 2016, but few expect the target to be raised beyond 75 basis points,” says Emsbo-Mattingly. “By a more than two-to-one margin, respondents consider current fiscal policy to be too restrictive rather than too stimulative.”

Two thirds of respondents recommend enacting structural policies to stimulate stronger economic growth, while more than half support increasing tax revenues by closing loopholes or raising rates and one third favors greater spending restraint, according to Emsbo-Mattingly.

“More than three fifths of respondents believe that uncertainty about the national election is holding back U.S. economic growth,” says LaVaughn Henry, CBE, a NABE director and chair of the NABE Economic Policy Survey Committee. “As for which candidate would do the best job as president of managing the economy, a majority (55%) choose Democratic nominee Hillary Clinton, followed distantly by Libertarian nominee Gary Johnson (15%) and Republican nominee Donald Trump (14%)."

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