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RBS's Girard Lowers Growth Forecast

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  • Description

    RBS managing director Michelle Girard gives her outlook for economic growth.

  • Duration 3:35
  • Date

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All fed chief Ben Bernanke's testimony before the joint economic committee is still underway on Capitol Hill.

Take a listen to his take on what could happen.

At the end of this year.

Indeed a severe tightening fiscal policy -- beginning of next year that is built into current law.

The so called fiscal cliff.

Would if allowed to occur pose a significant threat to recovery.

-- -- -- -- think about that managing director and senior economist at RBS.

Michelle is joining us from Stamford Connecticut Michelle would have a danger -- Ben Bernanke just talks about.

Uncertainty undermines confidence I mean how much should you factored and potentially as a pullback in the economy because of that well a couple of things I'm for the second half this year we actually have taken our numbers down a -- am from expecting growth to be around two and a half percentage growth being closer to 2% owing in part to this.

Increase uncertainty and the out of the employment numbers have been very disappointing -- it may -- seasonal and statistical quirks but I think some of it is a growing caution on the part of a business the decision makers involved with respect to -- we've also seen some of that in terms of weaker capital spending some with low or second half a bet.

And then in terms of 2013.

-- mean Ben Bernanke makes that point that that everybody's making that you know if all of the tax cuts.

We're allowed to expire at the spending cuts -- put in place.

You know it could subtracting he says three to 5% off the GDP growth and so clearly that would put the economy at risk for recession.

Do we need more stimulus on that -- because again Ben Bernanke did not really open the door for.

Additional bond buying from the Federal Reserve do we NATO would it do.

Nothing monetary stimulus is not the problem -- not lacking for liquidity now what the Fed you know should do.

Or whether it whether or not it Mena makes sense to engage in for example more purchases of treasury securities to bring -- long term rates which are already hit near record lows I mean.

This is so much about bad as it -- I think about the -- if they do take action.

-- trying to continue to provide support and provide insurance against an economy that you know does face downside risks and -- You know what and whether they -- -- not I do think it's likely that.

At the end of June they probably will take some action -- more likely just extending this program where they -- along secure long term treasuries and sell short term securities.

Temporarily and -- I think they'll wait and say whether or not ultimately the economy.

Does that.

Does weekend more than expected and -- so that we could be talking about QE3 but I don't think that's something that's in the cards for June biggest rest of the economy may and may be one that other people are talking about enough.

Well no I mean I think it's one that we're all talking about while the Euro situation is certainly a threat in the near term and -- financial conditions as a result of that.

The biggest threat for us is the fiscal situation and it's -- and it could be.

A positive surprise -- -- could golf.

Either way depending on election outcome and depending on whether or not congress can get its act together and come up with a credible plan toward deficit reduction and and provides certainty with respect to tax -- tax rates and if we could get back.

On -- your scenario -- 2000 at thirteen ends -- surprising people positively but.

You know just all but it couldn't really go either way and some that is that the biggest risk I think that we -- near term that is something you don't often hear Michelle put your money on Washington and what -- There is Ed -- And given out Michelle Girard of army -- well.

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