Conference Presentation, Panel
MI Summit 2013 - London: U.S. Overview: Gathering Steam?
Milken InstituteGregory Cappelli, Ross DeVol, Harold Ford Jr., J. Todd Morley, Eric Spiegel, Philippa Thomas
- A government shutdown driven by debt ceiling questions is expected to last at least one to two weeks, with Treasury bills becoming uncoverable by October 16 or 17, potentially damaging the U.S. credit rating.
- Political negotiations may involve 40 to 50 Republican caucus members being urged to cut a deal with the White House before the October 17 deadline, though momentum is doubted to sustain into the November election season.
- Healthcare-related policy changes are anticipated to occur approximately one to two weeks after the immediate debt ceiling crisis is resolved.
- Vladimir Putin is potentially in the conversation for the Nobel Peace Prize within 12 weeks, contingent upon avoiding military action.
- The U.S. economy is currently in a state of very slow growth, potentially less than 2%, with an illusory recovery masked by bubbles in the stock and bond markets; removing Federal Reserve stimulus could result in a complete loss of growth.
- The Federal Reserve is expected to eventually reverse its years-long stimulus, but tapering is forecast to begin no earlier than the end of the next quarter or next spring due to political constraints.
- U.S. capital spending has remained flat this year following 8-9% growth in the previous two, while exports are projected to fall well below the $6 billion recorded last year due to economic slowdowns in China and a recession in Europe.
- Hundreds of billions of dollars in projects are delayed on the drawing board as companies await resolution regarding the current year's budget, leading to a reluctance to make marginal investments amid default risk.
- Significant growth is predicted in software-led manufacturing, specifically 3D printing and additive manufacturing, with new product launches expected this year.
- Cyber theft is projected to grow annually, hovering between $300 and $400 billion, while financial asset inflation is viewed as less effective than capital invested in industry and manufacturing.
- U.S. innovation is currently described as focused on cost reduction and efficiency rather than the creation of new products, a trend that may accelerate if the lack of government partnership drives companies to seek labor abroad.
- The U.S. education system is characterized as sinking, ranking 21st in high school graduation rates and 16th in college outcomes, creating a skilled labor shortage that could cause manufacturing to move overseas.
- Regulatory burdens are described as excessive to the point of hindering business growth, and the removal of uncertainty and easy money is expected to trigger significant negative economic impacts.
- If a deal is reached by October 17, responsible Republicans and Democrats may unite, though the political environment remains turbulent and uncertain until the deadline.