Keith Larson is group publisher responsible for Putman Media's manufacturing automation titles Control, Control Design and Industrial Networking. Email him at [email protected] or check out his Google+ profile.
Three years into the U.S. economy's most anemic post-war recovery, signs finally are pointing to stronger growth over the next few years, according to Timothy Gill, economics director for
NEMA, the National Electrical Manufacturers Association. "Even as things improve, we have to be aware of the two elephants in the room," he added.
For Gill, who spoke at this week's ABB Automation & Power World event in Orlando, Fla., those twin elephants are the unprecedented federal debt together with the eventual wind-down of the Federal Reserve's ongoing stimulus programs.
"Following several years of trillion dollar deficits, federal debt-to-GDP ratios are a post-war high," Gill noted. Attempts to rein in the debt via taxes or spending cuts will be a drag on the economy. But if corrective action is not taken, eventually rising interest rates will raise debt servicing costs, crowding other government spending and requiring higher taxes and/or increased borrowing, Gill said. Further, history indicates that the chances for a misstep are high as the Fed inevitably transitions to tighter monetary policy. "It's a tightrope that must be walked. When and how do you begin to reel it in?"