For the fourth quarter in a row, the nation's top economics bloggers have conveyed a steadily deteriorating view of the U.S. economy in responses to the Kauffman Economic Outlook: A Quarterly Survey of Leading Economics Bloggers. In the fourth survey, respondents' outlook on the U.S. economy is more pessimistic than in any previous quarterly survey in 2010, with 99 percent saying that conditions are mixed, facing recession, or in recession. When asked about the probability of a double-dip recession in the United States, the average response is a 41 percent probability; two-fifths see a 20 percent probability, and opinion declines toward higher probabilities.
While the majority of bloggers in all 2010 surveys has consistently believed that the U.S. government is too involved in the U.S. economy, this quarter they were asked about the impact of the $868 billion dollar federal "stimulus" enacted in 2009. A majority of economics bloggers (62 percent) in this survey believes the unemployment rate would be higher today if the stimulus package had never passed.
Promoting entrepreneurship is an area with bipartisan support, so the survey asked bloggers to evaluate two different approaches. Only 37 percent agree with a more traditional policy of "subsidizing new firm formation with targeted spending and tax benefits" with 63 percent disagreeing (28 percent strongly). The alternative option to "reduce regulatory burdens and fees on new firm formation" is favored by 82 percent of respondents. Rather than recommending the government get more involved in helping entrepreneurs, top economics bloggers recommend it simply do less to hinder them.
Research highlights include:
- The bloggers remain skeptical about official economic statistics, though not as negative as the third quarter. This may be explained by the weak employment data that were reported during the late autumn months. Regardless, only 9 percent think the U.S. economy is doing better than official statistics indicate.
- The number of panelists expecting more rapid inflation exceed by a seven-to-one margin over those predicting disinflation. Sixty-two percent anticipate higher budget deficits, which is consistent with the strong majority (6-1) anticipating higher real interest rates. The outlooks for employment and GDP per capita growth are net positive, but muted with one-third expecting stagnation for both variables.
- The only group bloggers rate less favorably than Wall Street firms (with 12 percent As and Bs) is the U.S. Congress (no As and one B). Forty-eight percent give Congress an F this quarter. Nearly one-quarter of economics bloggers give the Federal Reserve an F, which also has the second highest A grades (6 percent).
- In every category of business, conditions right now are rated as "fair, bad, or very bad" by 90 percent of respondents.
The fourth Quarterly Outlook also features questions from individual economics bloggers. Felix Salmon (Reuters) asked what income qualifies an American citizen as being rich. Half of the panel think "rich" in America ranges from $250,000 to $500,000 in annual income. Bryan Caplan (EconLog) asked whether children represent a positive or negative externality (i.e. their potential cost-benefit impact on the world), and seven out of ten economics bloggers said yes, each additional child is a net plus. James Hamilton (Econbrowser) asked bloggers about the probability of a double-dip recession, and Mark Thoma (Economist's View) asked how much of an impact the economic stimulus package had on unemployment.