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The post-recession economy is wavering because of "masochistic policies that have been implemented over the past several years," researchers from the University of Central Florida said in their Institute for Economic Competitiveness report.
On the upside, housing is doing better, but it's unlikely to buoy the economy enough to offset business uncertainty created by healthcare reform and the coming fiscal cliff that will occur when tax cuts expire and mandated spending cuts begin in early 2013, the report said. Still, the report believes the housing market will improve through 2015, with housing starts doubling from 758,953 in 2012 to 1.5 million in 2015.
The study, which was directed by Sean Snaith and his research team, blames lackluster leadership for creating a situation where business leaders three years after the recession are unable to plan for the future.
"These policies have created a cloud of uncertainty that has restrained economic growth and left the private sector bound by the unanswered questions embodied in them," Snaith wrote in the report.
As proof, the research team says the economic policy uncertainty index dropped off quite significantly in the past two recessions, but continued to increase after the end of the 2007-2009 recession. "Is this the explanation for our lackluster, three-year old recovery?" the team said.
The analysts behind the UCF report expect consumer-spending growth to remain constricted by a soft labor market and balance sheet issues, with average growth of only 2.2% projected for the years 2012-2015.
Gross domestic product growth in 2012 and 2013 should average about 2.1% before growth accelerates to 2.7% in 2014 and 3.2% in 2015, the report said.
With inflation subdued through at least 2015, the UCF researchers believe "it will leave the door open for further quantitative easing" on the Fed's part.
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