U.S. Economy’s Slow Growth Still Getting No Respect

Citing the late comedian Rodney Dangerfield, professor of economics Randy Kroszner said the U.S. economy is still not getting any respect, despite posting strong numbers even among consumers. “When you look at various surveys, people say the economy is sputtering—or sometimes much more colorful language than that,” he said. “But if you look at people’s actions, they continue to buy goods and services, so I think their actions speak much more loudly than their words in this case.”

Kroszner, director of the Stigler Center for the Study of the Economy and the State, was one of three panelists who offered their opinions at the annual Business Forecast Luncheon. The event drew about a thousand alumni and friends of Chicago GSB to the Hyatt Regency Chicago on December 7 and around 275 to the Grand Hyatt New York on December 8.

The global economy registered the strongest growth in a generation in 2004, but this year slowed down to about 4 percent, said Michael Mussa, AM ’70, PhD ’74, senior fellow at the Institute for International Economics in Washington DC. “I expect we’ll see a modest further slowing of growth in the world economy next year,” Mussa said. “That is largely because the U.S. economy will lose a little bit of forward momentum. A couple of other economies, China in particular, are also likely to slow down. There’s not much reason to expect a significant pickup on average elsewhere in the world.”

Marvin Zonis, professor emeritus of business administration, cited a published report that real median household income fell for the fifth year in a row this year. “If that is true, that might explain why this economy doesn’t get any respect, because there’s an awful lot of American people who don’t feel better off even though the GDP is growing robustly.”

Zonis also noted that 40,000 to 60,000 U.S. troops will return from Iraq by the November 2006 Congressional elections. “These elections will be fascinating,” he said. “My prediction is that the Democrats will, in fact, take control of the House, but not of the Senate. The issue will turn on the extent of the weakness of the White House, if Republicans run from the White House as Democrats did in 1994.”

—Phil Rockrohr

Coverage of the speech appeared in news outlets across the country (such the Chicago Tribune and Bloomberg) as well in several countires around the world (Latin America, China and Australia).

The BFL series took place in 14 cities around the globe. The stops in Washington and London also garnered press covered.