“We are now in the fourth year of an economic expansion that officially began in mid-2009,” said Charles Plosser, president and CEO of the Federal Reserve Bank of Philadelphia, in a January 11 speech at the New Jersey Economic Leadership Forum. “The general path has continued to be forward, but we’ve made far slower progress than anyone would like.”
Plosser is preaching to the choir, so to speak. Any rational actor attempting to navigate the current economic environment in the United States is rightfully both confused and angry. An economy that was brought to its knees by special interest, a byzantine tax code that incentivizes irrational economic behavior and fiscal gamesmanship, and a lack of competent oversight, is now in the hands of one of the least favored Congresses in history.
Policymakers demonstrated their mettle during the fiscal cliff negotiations, and as a result, faith in U.S. leaders evaporated. Ideology and limited foresight on both sides of the aisle prolonged damaging uncertainty and delayed decision making at a time when what is needed most is action. A tax agreement was reached, but the sequester was delayed for two months. Adding some spice to America’s cocktail of fiscal problems, the debt ceiling was hit on December 31, and post-hoc financing is expected to last just until a decision on spending cuts has to be made.
But all things considered, Plosser maintains some optimism about the condition of the labor market…