RSG Economic Brief for March 2010

Dr. Douglas O. Walker
Robertson School of Government

The RSG U.S Economic Brief for March focuses on the current state of the U.S. economy and the recent health care bill passed by Congress.

The Brief points out:

• The banking system remains under strain as commercial banks continue to be shut down due to bad real estate loans;
  

• Compared to three years ago, the state of the U.S. economy has deteriorated markedly, with a much lower level of industrial production and a labor market in distress. In response to this situation, monetary policy has been used to reduce interest rates significantly and increase the monetary stock, with some success but less than that desired by policy makers; 

• As reported in the February Brief, some strengthening of the U.S. economy can be seen and there is some expectation this trend might continue through 2010 into 2011;

• In its policy section, the Brief looks at the health care bill recently passed by Congress and reviews the arguments in favor and against the bill. The debate over the bill has focused on more than its technical details to include questions about whether it will increase dependency by individuals on government and whether its costs are properly estimated. Both by its proponents and critics, the health care bill is seen as major legislation that will affect the U.S. economy for many years to come; and

• The Brief poses some questions for students to consider about why some people choose to remain without health care insurance and the effects their decision might have on the market for insurance. It also asks about the reason insurance companies deny coverage based on pre-existing conditions and limit how much money they will pay out to individuals, and how dropping these policies might affect the market for insurance. Students are urged to ask themselves these questions, think about them, and discuss them with the Brief’s editor, Mr. Frederick Poorbaugh, Teaching Assistant for the economics courses, during his office hours from 2 to 4 pm on Thursdays in the Political Caucus Room on the Third Floor of Robertson Hall. Distance students may contact Erick by e-mail at fredpoo@regent.edu and by phone during his office hours at 757-352-4723.

As noted in February's brief, the U.S. economy appears to be recovering from one of its deepest and longest downturns in decades, but unemployment remains very high and little or no progress has been made towards its reduction. The fiscal deficit of the United States is also unsustainable and adding to the pressures on world financial markets. While a recovery may be underway, the economic situation in the U.S. remains precarious and the outlook for the economy is highly uncertain.