By Tom Hudson, McClatchy Newspapers –
What felt like building momentum has slowed to a crawl. At the beginning of the year, the U.S. economy was predicted to grow by about 2.5 percent. That was the best guess by the Federal Reserve. While it’s not spectacular, it would mean an American economy that’s $377 billion bigger than it was in 2011. With half the year over, we have a lot of ground to make up.
On Thursday, the first report of the second-quarter gross domestic product will be released. The outlook is not good. Surveys of economists peg second-quarter growth around a paltry 1.5 percent. Yes, that’s still positive — but barely. And it doesn’t feel like escape velocity for most Americans struggling to bring home bigger paychecks, or any paycheck, for the 23 million Americans out of work or underemployed.
Why the slowdown? Companies have been less willing to invest in beefing up inventories or new plants and equipment. These are the deeds behind complaints from CEOs and small business owners about uncertainty. Uncertainty favors self-preservation over risk-taking. American businesses respond to profit and loss opportunities, not politics; policies, not partisanship.
Debates over whether or not to extend tax cuts and how to address automatic cuts to government spending in 2013 are necessary. But so is action on these issues. As the economy coasts on financial fumes, the job of igniting economic certainty and real growth becomes that much more essential and difficult.
