When last we checked in on The Kauffman Foundation’s quarterly survey of top economic bloggers, in Q2 of 2011, things were looking slightly hopeful. Bloggers were feeling more optimistic about the economy than they had in quite a while. However, The Kauffman Economic Outlook: A Quarterly Survey of Leading Economic Bloggers, Third Quarter 2011 is out, and the news isn’t good—economics bloggers surveyed were more pessimistic in their outlook on the U.S. economy than at any time in 2011.
55 percent of respondents say conditions are “mixed”—compared to 81 percent in the second-quarter survey—and fears of the recession are up substantially: Last quarter, just 4 percent said the economy was “facing recession,” but this quarter, 33 percent say so. An additional 7 percent describe the economy as “weak and recessing.” Just 5 percent believe the economy is “strong with uncertain growth.”
Asked to select five from a list of adjectives to describe the economy, the number-one term bloggers chose was “uncertain” (the same as last quarter). Close behind were “fragile,” “vulnerable” and “weak.”
Looking forward for the next three years, the picture the economic bloggers see is no more positive. More than 60 percent believe interest rates and inflation will increase or increase strongly. Just 50 percent of respondents anticipate employment growth, a substantial drop from the 70 percent who expected employment growth in the second-quarter survey.
The panel of bloggers is largely nonpartisan, but nonetheless, nearly two-thirds of respondents think the government is too involved in the economy. 44 percent think the economy is worse than official government statistics indicate (up from 32 percent last quarter), although 49 percent believe the statistics are an accurate reflection of economic reality. The top policy recommendation remains for the government to "reduce regulatory burdens and fees on new firm formation”; this was supported by 88 percent of respondents.
In every category of business, conditions right now are rated as “fair, bad or very bad” by more than 69 percent of respondents. Venture capital and angel capital are faring the best, being rated fair, bad or very bad by only 69 percent of respondents; bank lending to individuals fared worst, with conditions rated negative by 90 percent of respondents.
The survey also asked the bloggers to agree or disagree with some predictions about what might happen by the end of 2012. Among the predictions most relevant to small businesses, 56 percent believe that President Obama will be re-elected, 35 percent believe the U.S. will face a double-dip recession and 21 percent believe the U.S. unemployment rate will dip below 7 percent.
One positive note was that nearly half of respondents (44 percent) expect U.S. economic growth to return to a steady 2 percent annual rate. 18 percent predict economic growth will be slower, and 14 percent say it will be faster.
Keep in mind that this survey was conducted in mid-July, a time when debate about the debt ceiling was raging and the U.S. outlook seemed particularly grim. While recent economic news has been somewhat more positive, the continued ups and downs of the European debt crisis means the term “uncertain” is likely to surface again in the fourth-quarter survey.
Access all of the Kauffman Economic Outlook quarterly surveys.