Thursday, April 05, 2012

Demand, Not Supply, Is Restraining The Economy

Mark Thoma in moneywatch Demand, not supply, is restraining the economy.

"The latest McKinsey global survey supports Bernanke's position that lack of demand is the most important factor holding back the economy. The survey -- which is of corporate managers from around the world, not just those in the U.S. -- finds that 'the single greatest fear among executives everywhere is weak consumer demand for their companies' products and services.'

One of the key indicators of structural problems is the inability to match workers to available jobs. But 'access to talent' scored very low in the survey, ranking No. 14 out of a list of 18 factors that could inhibit economic growth over the next 12 months. Government regulation does score fairly high on this list, but, again, this is an international survey. When similar surveys are conducted for the U.S., lack of demand, not regulation, is the most commonly cited problem by some margin."

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