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UBS Chief Economist Maury Harris on the economic impact of sequestration and Federal Reserve policy.
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Scott says economic damage from the sequester has been overestimate.
Joining us -- -- with the way his view and perspective on this economy.
We're pleased to welcome chief US economist for UBS investment research Maury Harris -- could see you -- to be -- this.
First like I've got to say Ben Bernanke today keeping money -- I guess we're going to see this for active -- the farthest horizon.
Is it exactly what you expected.
Well that's just what we expected because.
The Fed is very cautious.
And there are still worried about downside risk on the economy and they -- so again today.
And as long as -- -- that cautious attitude they're going to keep pumping in money like crazy.
-- well 85 billion a month and and and today -- had -- -- his all concerned about the fiscal.
Drag on the economy as much as he went -- one and a half percent off GDP.
At the same time the Fed is looking at as high -- two point 8% growth -- are just doing the little country boy map here and it comes -- In my book to four point 3% GDP that they've been thinking about for this year and -- that would be startling wouldn't.
Yes it would be -- and they may be over estimating.
What this -- is doing right the economy -- him Andrea what they're doing is more important wanna talk about some arithmetic.
Bernanke puncture an 85 billion a month they're sequestered -- found billion for fiscal year what matters most.
The monetary policy.
Absolutely.
And this thing is I -- down here that the sequester and the fiscal cliff that -- So concerned about it here's what it adds up to.
The fiscal cliff deal had 620 billion in taxes over ten years sixteen billion spending cuts.
Over ten years the sequester in outlays for the remainder of this fiscal year amounts deported for 45 billion dollars -- more it was a site.
Total.
Total.
-- and sequester.
45 billion I'll ask me who's kidding who here that's not a lot of money and -- fifteen trillion dollar economy.
And also things that you you know what's happening in your -- some questioner is implemented primarily through.
Furloughs.
Not layoffs.
At -- -- a lot of people.
People that'll work for government gonna work certainly one or two day shorter month.
But you're not gonna have all these big headcount cuts but not all these big headcount cuts -- we all surgery in his.
As we look at is unemployment projections seven and a half percent this year we're still full percentage point away from.
The point in which he said he would start easing and a six and a half percent unemployment.
The mrs.
This forecast looks a little while I'll put it this way a little more ambiguous -- I would normally like in the usually pretty ambiguous.
Well you know that the Fed has been.
Forecasting the unemployment rate to be higher than it actually has -- compound -- than they thought so they tell me seven and a half I think.
There's probably some downside risks and that's what kept you your outlook markets the economy for the remainder of the year.
Well I think we're going to continue to see a market where stocks outperform bonds and I think the economy could surprise on the high side.
The Fed said that their members expect GDP growth year -- here in between 2.3 people two point 8%.
It is going to be all about almost 3% and we haven't officially two point -- on -- year and the year and patient.
Great now that's forever -- -- forecast.
Good to see you thanks more heiress we appreciate.
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