The U.S. Department of Commerce has released its estimates for first quarter 2011 economic growth, and it’s not good. The economy grew at a paltry 1.8 percent from January to March. This is down from 3.1 percent for the last quarter of 2010.
Since the recovery officially began in the summer of 2008, the economy has been nothing if not fickle and inconsistent. From Table 1:
3rd Qtr, 2009: 1.6 %
4th Qtr, 2009: 5.0 %
1st Qtr, 2010: 3.7 %
2nd Qtr, 2010: 1.7 %
3rd Qtr, 2010: 2.6 %
4th Qtr, 2010: 3.1 %
1st Qtr, 2011: 1.8 %
This variability makes it difficult for investors to have confidence in the recovery, and discretionary fiscal policy isn’t helping. Predicting which way the federal government will go simply creates uncertainty, making employers and investors skittish. This lackluster economic performance begs for a policy approach that emphasizes policy consistency and rules over discretion. The federal government needs to focus less on pulling economic levers to try to manipulate the economy into growth through stimulus and more on creating a steady platform for encouraging profitable investment across the board.
— Samuel R. Staley is Robert W. Galvin fellow and director of urban & land use policy at the Reason Foundation.