Conference Presentation, Panel, Other
MI Summit 2013 - London: U.S. Overview: Gathering Steam? (updated)
Milken InstituteGregory Cappelli, Ross DeVol, Harold Ford Jr., J. Todd Morley, Eric Spiegel, Philippa Thomas
- A government shutdown lasting one to two weeks is anticipated due to a debt ceiling deadline around October 16 or 17, with a major crisis predicted if a default occurs as this has never happened in the modern era.
- Negotiations involving 40 to 50 Republican caucus members are expected within one to two weeks to resume healthcare funding, though sustained political momentum is doubted due to the election season.
- The US economy is characterized by very slow growth and artificially inflated data, such as auto sales driven by zero percent financing, with real growth potentially absent once Fed stimulus is removed.
- Federal Reserve taper easing is forecast to be delayed until December or the end of the next quarter due to data requirements and political constraints, while a debt ceiling resolution might enable a corporate tax reform strategy.
- Executive confidence is expected to remain below the long-run average for the third quarter, alongside continued investment in financial assets rather than industry or manufacturing, leading to asset inflation.
- Software-led manufacturing sectors including 3D and additive printing are projected to experience huge growth, driven by cheap energy and rising Asian labor rates, with 70% of all software development remaining in the US.
- Companies may delay multibillion-dollar pipelines and other projects for two to four years if government uncertainty remains unaddressed, despite specific manufacturing projects like steel plants in Youngstown, Ohio.
- The medical device tax is forecast to cost the industry $80 million this year, forcing offsets through R&D, jobs, or price increases, while healthcare spending is expected to drop to 3.9% amid industry consolidation and shrinkage.
- Security and counterintelligence industries are projected to grow as an unambiguous expansion sector due to cyber theft estimated at $300 to $400 billion annually.
- Labor market barriers persist as 80 to 85 million people over age 25 lack post-secondary degrees, hindering the filling of 3 to 3.5 million advertised jobs.
- US education outcomes remain at 21st place for high school graduations and 16th for college graduation outcomes, compounded by US household education spending of 2% compared to 15 to 20% in China.
- Regulatory burdens are expected to continue increasing, citing 500 new regulations implemented in the first term of the Obama administration.
- While the administration's posture toward business is viewed negatively, policies like card check are not expected to materialize and Bush tax cuts are projected to be extended.