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11. Slower Growth

Author:
John H. Makin
Publication Date:
02-2005
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
The average forecast for 2005 U.S. growth is 3.5 percent, with some prognosticators hoping for 4 percent. This forecast is predicated upon the assumption that the economy is on a sustainable expansion path, where consumption will be supported by steady growth of employment and household incomes. The 3.5 percent growth forecast for 2005 is identical to the mean growth rate of the U.S. economy since 1947. However, there is good reason to believe that the consensus forecast is too high. This possibility has important consequences because U.S. growth must be sustained at least at average levels to avoid a sharp drop in global growth. There are no signs of higher growth in Europe and Asia. Growth in Japan is looking weaker, while Chinese growth is moderating.
Topic:
Economics, International Trade and Finance, and Political Economy
Political Geography:
United States, Japan, China, Europe, and Asia

12. America Demands; China Supplies

Author:
John H. Makin
Publication Date:
04-2004
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
Say's Law, named after French economist Jean- Baptiste Say (1767–1832), was promulgated at the time of the Industrial Revolution when some feared that purchasing power would be insufficient to absorb the ever-growing output of the newly mechanized economy. It states simply and reassuringly that supply creates its own demand. More specifically, the production of output tends to generate purchasing power equal to the value of that output.
Topic:
Economics, International Trade and Finance, and Political Economy
Political Geography:
China, America, and Asia

13. "Animal Spirits" and Policy Stimulants

Author:
John H. Makin
Publication Date:
12-2003
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
The policy stimulants administered in very large doses to the U.S. economy at midyear are wearing off fast. China's boom, while not ending, is cooling. The result of those two facts will be U.S. growth of 3 percent or less in the final quarter of this year and the first quarter of next before tax rebates kick in to provide a lone quarter of 4 percent growth next spring. Then it will be back to 3 percent, plus or minus half a percent, in the second half of 2004 as the boost from tax cuts fades, provided stock markets hold up.
Topic:
Economics, International Trade and Finance, and Political Economy
Political Geography:
United States and China