Get ready for some March Madness of a different sort. Instead of three-pointers, slam dunks and fast breaks, we will be transfixed on talk of debt ceiling, budget resolutions and sequestration.
Nick Perna, chief economist for Webster Bank, said to expect slow growth in 2013 and accelerated growth in 2014 during his talk at the Greater Norwalk Chamber of Commerce's 2013 Economic Outlook Luncheon held Tuesday at Continental Manor. The growth, however, is dependent upon the federal government resolving its budget issues, which comes to a head in March.
"If we default it will be a replay of 2008 all over again. I can guarantee you that," Perna said. "It will give new meaning to March Madness."
Perna, delivering the talk with his usual amount of humor and enthusiasm, said he was invited to the White House before Christmas to give his opinions on the economy. He told officials there that any fiscal cliff resolution must also include solutions to the debt ceiling. The late passage of the American Taxpayer Relief Act of 2012 -- hence avoiding the fiscal cliff -- did not resolve the debt ceiling and only kept a cloud of uncertainty over the U.S. economy.
"Instead of dissipating uncertainty, it intensified it," he said.
Perna expects more last-minute agreements in March to resolve issues such as the debt ceiling and sequestration (cancelation of budget resources). Then, he said, the economy can grow again.
"We are poised for growth," he said. "If we can get this out of the way, there is pent-up demand for cars and even housing. If we can rectify all that stuff the economy has a lot of room to grow --if we can get out of our own way."
Rae Rosen, vice president and regional economist for the Federal Reserve Bank of New York, gave similar thoughts on the economy last week in Stamford at the The National Economic Outlook breakfast held by the Business Council of Fairfield County. She predicated "moderate growth" in 2013, but said that prediction hinges on what the federal government does in March.
Perna predicts GDP growth of about 2 percent this year and 3.5 to 4 percent next year. Citing fellow economist Edward Deak of Fairfield University, he said the state economy will grow faster in 2014.
"All told, it's not great, but it's not as bad as it looks either," Perna said of the state economy.
Among other opinions on the economy expressed by Perna were: the recession in Europe will end by the end of the year; Connecticut should combine some of its community and state colleges to free up money in the budget; double-digit college tuition increases are "truly criminal;" and Connecticut unemployment numbers are flawed.
Webster Bank sponsored the event.
Distributed by MCT Information Services
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