Wednesday, September 7, 2011

How to Wreck an Economy

Andy Sullivan

With the U.S. economy facing a heightened risk of sliding back into recession, the country’s elected representatives may be pushing it closer to the brink. Democrats and Republicans say job creation is a top priority as they return to work this week, but there is a growing body of evidence that Congress is actually hurting the economy. A protracted budget stalemate in the first half of the year caused nervous federal agencies to sit on billions of dollars that should have been circulating through the economy.

Doubts about Congress’ ability to keep the money flowing might lead contractors to charge more for their services even at a time when work is hard to come by, one industry official said. “If the certainty of being paid goes away, I think contractors are either going to start raising their bids to protect themselves against that uncertainty, or they’re just going to drop out of bidding,” said Ken Simonson, chief economist for the Associated General Contractors of America. ”They’re extremely frustrated.”

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