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Time to Take off the Shackles?

Sigma Investment Counselors

May 19, 2015

Much has been written about the tepid economic recovery of the past several years.  GDP growth has been comparatively weak versus past recoveries.  As a result, employment growth has been similarly soft and many pundits conjecture that this is why discouraged workers have simply given up looking for jobs and dropped out of the labor force.

But, in the past several months, job growth has actually been sustained with over 200,000 people per month finding employment, according to a Bloomberg report.  How to ensure the good news continues?

It may require some regulatory relief.  Many laws and regulations have been passed over the past several years (Affordable Care Act, Dodd-Frank, EPA rules, etc.) and while well intentioned, the clear side affect is to put a drag on business, which, all else being equal, often leads to hiring slowdowns.  In the late 1970’s and early 1980’s, when economic growth was similarly stifled, President Reagan campaigned on a platform of tax and regulatory relief.  Following his election, he made good on his promises and an economic boom ensued. 

This is not to say that all regulation is bad, or that all income re-distribution is improper, but improved economic growth from regulatory and tax reform will cure a lot of ills and it may be time to prune some of the less beneficial regulations that are hampering the economy.

All comments and questions are welcomed.

Bob Bilkie, CFA®

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