I had the privilege to be on a conference call last night with two of the top U.S. economists for a briefing on the future of the U.S. economy. The call, which was facilitated by the great folks at Americans for Prosperity, featured famed Reagan economist Arthur Laffer, and the Club for Growth's Steven Moore...both men best-selling authors and members of the Wall Street Journal editorial board.

Their outlook for the U.S. economy?  Bleak.

Among their top concerns:

Bailouts – In the past month, the Federal Government has spent more than $5 Trillion on government bailouts – that is MORE THAN THE TOTAL AMOUNT SPENT BY THE U.S. TO WIN WORLD WAR II.  Think that is astonishing? That figure is a conservative estimate.  According to the New York Times yesterday, that figure could be closer to $7 Trillion.  And when you consider this massive effort was largely to bail out “bad behaviour” on the part of so many Americans – rather than building national infrastructure or producing a lasting product – well, it is quite a dark spot on our nation’s history.

The Obama Factor – Laffer and Moore both agreed that the markets have been adjusting downward for a couple of months toward the foregone conclusion (even before Election Day) that Barack Obama was going to become President.  They both admitted George Bush’s numerous faults on the economic front – i.e., out-of-control spending which, unbelievably, out-paced the Democrats' spending for the majority of his eight years, along with his “stimulus packages” which were too little, too late.  But their concerns over Bush pale in comparison to what is expected from an Obama Administration.  Case in point: The economic advisers for the Obama Administration sat down with the Wall Street Journal late last week, and apparently could not answer any of the WSJ’s fundamental, tough questions regarding the upcoming challenges of the U.S. economy. And worse, while Laffer thinks there are a few good economists in the mix, the majority of Obama’s economic team consists mostly of Jimmy Carter Administration economists. Ugh. This does not bode well for the future of inflation, stocks, consumer spending, and jobs. 

The Long Winter – The economists said Americans need to batten down the hatches for a long, hard winter.  In fact, they said the next 9 to 12 months will be a rough landing. Obama will be introducing a number of bills in his first year which will send terribly negative messages to Wall Street. For starters, Obama is expected to push Cap-and-Trade Agreements, which are basically “global warming mandates” that will place stringent regulations on large- and medium-sized businesses (at precisely the wrong economic time) to reduce their emissions, and furthermore, will push for “green jobs” over jobs in general during a national Recession when, frankly, the U.S. needs to be focused on jobs, any jobs. Obama is also expected to push for Card Check, which will eliminate secret ballots at unionized workplaces, which will give Unions even more bargaining power and throw us back to the 70s in terms of labour and productivity  (think: GM lack of competitiveness). Obama is also expected to increase income taxes on small businesses that have as few as 20 employees. Nothing like revving up the entreprenuerial engine of the ingenious American people!  In addition, his core Liberal policies to increase welfare and social services across the board, including introducing a massive universal healthcare plan, will do nothing but add to the massive government spending spree already in effect.  A lethal cocktail for a financial industry that is already teetering on the edge.  All of the above is expected to trigger a detrimental effect on virtually every index (stock market, consumer spending, consumer confidence, and housing).  The glimmer of hope is that Obama, facing a tough economy, has apparently already agreed to take off the table his "tax increases for the wealthy" which he campaigned heavily on - at least for the first years of his Administration.  Well, that's something we can raise our Waterford crystal glasses to, isn't it?

Despite the bleak outlook, Laffer concluded by saying that America remains a great country, and that with the help of the American people being "smart" and keeping their heads, that the country would likely see recovery in mid-2010... hmmm... just in time for the mid-term Elections.