The US Has to Find New Ways to Grow the Economy: Stephen Roach

With the U.S. GDP declining by an annual 1% in the first quarter of 2014, and the IMF recently cutting its growth forecast for the country’s GDP to 2.0% from the previous 2.8%, economists became more concerned about finding ways to boost the economy. In a recent intervention on CNBC, Stephen Roach, a senior fellow at the Yale University provided his insight on the economy and consumers, stating that amid the around 1.25% average growth in the past six years, which represents a “sluggish growth,” there is a need to find new ways to grow the economy. Roach also said that 70% of the economy is not growing the way it used to.
US Dollar Bill Currency Money

“Income is weak. Forget income inequality. Income, in general, is weak. Job growth is slow,”

Roach considers that a big problem is the fact that the U.S. is not producing enough internal income. The policies such as the Fed boosting the asset markets in order to make the consumers to spend through wealth effects are not “getting attractions.”

“If I were King? I’d look at the problem. We’ve got a balance sheet problem. Let’s put in place policies that would enable people to pay down debt more quickly and rebuild savings so that they feel more secure about their long-term prospects for financial security,” Roach added.

Regarding the investments in the private sector, Roach stated that companies are concerned about the slow demand growth. In this way, if the demand is not growing quick enough firms do not have the incentive to increase their capacities or to hire new workers. In this way, if demand picks up, than the investment will “kick in big time” because companies have a lot of cash flow on their corporate balance sheets.

Watch the full video:

As we have reported, the IMF reduced its 2014 growth forecast for the U.S. economy to 2% from to 2.8%. However, as Christine Lagarde mentioned in an interview with Bloomberg, this reduction should not be viewed as a sign of a downward spiral, which is also confirmed by the IMF’s 3% growth outlook for the next year.

Disclosure: none

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Largest Pharmaceutical Companies In the World

The 10 Most Expensive Android Apps

The 9 Most Expensive Designer Bags in the World

The 7 Most Expensive Real Estate in the World

The 10 Most Expensive eBay Items Ever Sold

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!