The National Association for Business Economics released its semiannual Economic Policy Survey Sunday, and nearly 60% of respondents said they support the Federal Reserve's current monetary policies. But only 39% of respondents feel that the government's current fiscal stance is appropriate, and 75% of them oppose another stimulus package.
"The majority of the economists surveyed consider monetary policy to be currently appropriate, with greater disagreement over how the Federal Reserve should proceed over the next 12 months," according to NABE President Lynn Reaser, who is also chief economist for Point Loma Nazarene University.
Respondents were nearly evenly split among what the Fed's future direction should be, with 36% of them preferring a "more restrictive" monetary policy, 33% preferring a "more stimulative" policy, and 31% preferring that policies remain "unchanged." Most panelists said deflation is the greater risk to the U.S. economy in the short term, but that inflation is more to be feared in the longer term.
Many of the panelists were also highly skeptic that the Fed will be able to time its policy shift well, believing it will start tightening too late. The survey, which received responses from a panel of 242 members of the NABE, was taken from July 30 through Aug. 10.
Support Employment Growth ... But How?
"Regarding fiscal policy, the economists generally believe the near-term focus should be the promotion of economic growth rather than deficit reduction," Reaser said. "The majority of the respondents also do not believe another stimulus package is necessary but think the various tax cuts should be extended beyond their scheduled expiration at year-end."
Indeed, only 39% survey respondents feel that the current fiscal policy is appropriate, down from 44% in March, with 37% believing it is too stimulative and 24% saying it is too restrictive. A strong majority suggests the government should focus on employment improvements or support.
Two-thirds of the respondents support the extension of the unemployment benefits recently enacted by Congress and three-quarters think the government should do more to support employment growth. However, 41% of them think the best way to support employment is to provide more clarity about future regulations and tax policy. Only 23% suggest meaningful tax incentives for companies that increase hiring.
An Opposing View for Austerity Measures
While the majority of NABE survey respondents prefer promoting economic growth over deficit reduction, not everybody agrees. Billionaire investor Jim Rogers, chairman of Rogers Holdings, said on CNBC that in order for economy to recover, the U.S. needs to stop printing and spending money, and instead adopt austerity measures like the Europeans have.
"I'd rather have the Europeans running the U.S. central bank than the people running the U.S. central bank, [at] least they know how to try to build for the future," Rogers told CNBC. Economies in trouble should be allowed to go under, like bad companies, he suggested. "You have a painful period for awhile, and then you start over."
He does not support either the administration's or the Fed's policies, saying they just "push the problem out to the future."
NABE Economists Say Promote Growth Now, Fix Deficit Later