In 2011, the U.S. economy will grow significantly more slowly than during recovery from previous recessions and unemployment will remain high, prognosticators agreed at Business Forecast 2011 on November 30. “My forecast is much like the weather today: partly cloudy with a chance of intense storms coming down the line, because we still have a lot of fragilities out there,” said Raghuram Rajan, Eric J. Gleacher Distinguished Service Professor of Finance. In states that did not suffer as much from the housing bust, employment and sales are growing, Rajan said. People with incomes of $75,000 or more are more optimistic about the economy, while unemployment for people with college degrees is half as high as for those without degrees, he said.
“These divisions across geographic and income segments cause a deterioration in political dialogue,” Rajan said. “In the U.S., the left does not want to talk to the right, which is a recipe for gridlock. In the past, government not working may not have been a bad thing. But government not working when your fiscal deficit is 10 percent of GDP is not a good idea. Much needs to be done to bring things back under control, and that requires cooperation.”
— Phil Rockrohr