NABE Policy Survey: August, 2004 Details

Greatest Short-Term Risk to the U.S. Economy

Terrorism replaced the deficit and employment growth at the top of the worry list. Terrorism jumped to 40%, near its peak in March 2003. Inflation remains low on the list, as are worries about lack of jobs and household or corporate debt.

Short-Term Risks to the U. S. Economy
(percent of survey panelists responding)

	Survey Month
	August 2002	Mar 2003	August 2003	Mar 2004	Aug 2004
Defense/Terrorism	3	41	13	19	40
Govt Spending/deficit	NA	11	21	25	23
Inflation	NA	NA	1	6	9
Unemployment/ employment	NA	NA	16	25	6
Excessive household/ corporate debt	7	5	3	6	5
Overcapacity	5	8	10	1	1

Greatest Long-Term Challenges to the U.S. Economy

We separated long-term concerns from short-term for this survey. The growth of the elderly population remained at the top of the list of long-term problems, but health care replaced the deficit in second place.

Longer-Term Challenges to the U.S. Economy
(percent of survey panelists responding)

	Survey Date
	March 2004	August 2004
Growth of elderly population/dependency ratio	27	23
Health care	19	22
Education system/ shortage of skilled labor	12	19
Federal deficit	24	17
Competitiveness	NA	6

Strengths in the U.S. Economy

Flexibility replaced productivity gains and our country’s technological lead as the economy’s greatest strengths. This latter category topped the list of strengths for more than two years. Deep capital markets garnered 10% of the responses, respectively.

U.S. Economic Strengths
(percent of survey panelists responding)

	Survey Date
	Aug 2002	Mar 2003	Aug 2003	Mar 2004	Aug 2004
Flexible labor markets/ economy	14	10	11	24	36
Productivity/technology	46	54	43	45	35
Deep capital markets	24	8	12	11	10

Monetary Policy Is About Right

Although most of our panelists still think monetary policy is about right, the percentage thinking it is too loose is rising, as 36% now think monetary policy is too stimulative compared to only 9% in March 2003.

NABE Panelists Views on Monetary Policy
(percent reporting)

	Current monetary policy is:
Survey Date	Too restrictive	About Right	Too Stimulative
August 2004	4	59	36
March 2004	3	70	28
August 2003	9	68	23
March 2003	8	81	9
August 2002	8	77	12
March 2002	3	78	17
August 2001	17	67	11
March 2001	34	56	7
August 2000	9	76	12
February 2000	5	62	32
August 1999	3	74	22
March 1999	2	75	23
October 1998	7	82	11
May 1998	2	76	22
February 1998	8	86	6
November 1997	4	83	7
August 1997	6	85	7
May 1997	12	74	14
February 1997	7	83	10
November 1996	14	77	8

Looking ahead, most respondents (62%) would prefer monetary policy to tighten over the next six months, compared with 47% in March. Almost all (92%) think short-term interest rates will increase.

Fiscal Policy

Nearly two-thirds of respondents felt current policy is too stimulative, up from a year ago, while only 2% believe it is too tight. Eighty percent of respondents believe fiscal policy should become more restrictive over the next two years, up from two-thirds, but only 37% believe fiscal policy will tighten, while 20% believe it will become even looser.

	Current fiscal policy is:			Fiscal policy should be in two years:		Fiscal policy is expected to be in two years:
	Aug 2003	Aug 2004		Aug 2003	Aug 2004	Aug 2003	Aug 2004
Too Stimulative	49	66	Tighter	63	77	25	37
About right	40	29	Same	20	15	35	41
Too tight	9	2	Looser	14	4	39	20

Note: Dates refer to survey dates

Survey Highlights

PDF Version (better for printing)

Answer tabulations (PDF)

Teleconference slide show (PDF) (Flash) (PPT)

 

---