CHICAGO--()--In the December issue of Themes on the Economy®, Diane Swonk urges Washington to heed the advice of a 20th century leader working to heal divisions in the country. John F. Kennedy, when still a U.S. senator, said: “Let us not despair but act. Let us not seek the Republican answer or the Democratic answer, but the right answer.”
“Let us not despair but act. Let us not seek the Republican answer or the Democratic answer, but the right answer.”
Our chief economist lists the reasons why 2013 could be the best year for the U.S. economy since 2005. “If we overcome the near term risk associated with fiscal policy, the year ahead could be a transitional period: the housing market is finally coming back; cuts to state and local government spending are abating; and, business investment should pick up if certainty can be restored on the fiscal front. Add to that, persistently easy monetary policy, which makes it easier for both businesses and households to gain credit.”
Swonk explains further that domestic policy is effectively foreign policy: “The threat to our credit rating is particularly disturbing, as further downgrades could undermine the dollar’s status as the world’s reserve currency. Indeed, Europe with its disparate countries has demonstrated more resolve to save the euro than we have shown in trying to resolve our fiscal problems.”
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