Wait til next spring…
from Ben Bernanke’s “state of the economy” Nov. 20, 2012
But the threat of austerity is the main concern.
Although fiscal policy at the federal level was quite expansionary during the recession and early in the recovery, as the recovery proceeded, the support provided for the economy by federal fiscal actions was increasingly offset by the adverse effects of tight budget
http://images.intellitxt.com/ast/adTypes/icon1.png](http://www.businessinsider.com/ben-bernanke-the-economic-recovery-and-economic-policy-2012-11#) conditions for state and local governments. In response to a large and sustained decline in their tax revenues, state and local governments have cut about 600,000 jobs on net since the third quarter of 2008 while reducing real expenditures for infrastructure projects by 20 percent. More recently, the situation has to some extent reversed: The drag on economic growth from state and local fiscal policy has diminished as revenues have improved, easing the pressures for further spending cuts or tax increases. In contrast, the phasing-out of earlier stimulus programs and policy actions to reduce the federal budget deficit have led federal fiscal policy to begin restraining GDP growth. Indeed, under almost any plausible scenario, next year the drag from federal fiscal policy on GDP growth will outweigh the positive effects on growth from fiscal expansion at the state and local level. However, the overall effect of federal fiscal policy on the economy, both in the near term and in the longer run, remains quite uncertain and depends on how policymakers meet two daunting fiscal challenges–one by the start of the new year and the other no later than the spring.
This is the story everyone needs to be watching. Everything else is kind of a distraction.
Read more: http://www.businessinsider.com/ben-bernanke-the-economic-recovery-and-economic-policy-2012-11#ixzz2Cp35DecY