Top Charlotte business executives described an overwhelmingly dismal vision for the nation’s economy next year, telling the crowd at the Charlotte Chamber’s annual economic forum to expect more anemic growth and gridlock in the federal government.
While the economy continues to show signs of recovery, politics is dampening business, they said – from the so-called “fiscal cliff” of tax increases and spending cuts set to go into effect next year to the lack of movement on debt and entitlement spending, reports the Charlotte Observer.
“The partisanship is unparalleled in Washington today. Our ability to move forward as a country is blocked,” Duke Energy CEO Jim Rogers said. “The government is the biggest drag on our economy today.” He warned of a federal budget that would soon see entitlement and debt payments outstripping revenue. He also said the country might consider rethinking its immigration laws.
The forum also included the chief executives of Charlotte companies Nucor and Premier, along with Charlotte’s top-ranking executive at Wells Fargo, David Carroll, and Federal Reserve Bank of Richmond president Jeffrey Lacker.
Bank of America CEO Brian Moynihan was scheduled to attend, but did not make it because of travel delays, according to the bank. Co-Chief Operating Officer David Darnell, who is based in Charlotte, took his place.
Darnell talked about the two diverging storylines in the economy, as he saw them. “One is an economy of some steady growth and progress,” Darnell said. “The other is a very consistent story of uncertainty.”
While corporate America’s balance sheets are in good shape, and there’s been some reduction in unemployment, businesses are loath to invest and consumers are hesitant to take on debt as the government struggles to come to agreement on issues like the fiscal cliff.
“Our economic fortunes,” Carroll at Wells Fargo said, “are much more driven by politics than pure financial issues.” He said new laws like the Dodd-Frank financial reform act have made business owners more hesitant to invest and criticized the Federal Reserve’s monetary policy that he said has eroded the value of the dollar. And, “I don’t know of anyone who’s terribly optimistic that we’re going to see fundamental tax or entitlement reform,” Carroll said.
But because of that environment, Rogers said a tumble off the fiscal cliff could have a bright spot. For one, he said the impact has likely been hyped by the media. But also, “Going over it is not a bad thing because we need more pain to do the hard things that our leaders are unwilling to do,” Rogers said.
Federal Reserve Chairman Ben Bernanke, however, has warned that the U.S. would go into a recession if the scheduled tax increases and deep spending cuts take effect.
Monday’s conference marked the final one for Dan DiMicco as CEO of Charlotte steelmaker Nucor. The company announced last month he was stepping down at the end of the year. He said that the government has ignored the true problems our economy has, and said the conversation in Washington “almost guarantees another year of tepid growth or worse.” Read More.