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That surprise a contraction would not surprise a Harvard economics professor here is Jeffrey Frankel.
Professor ice bowl we -- gonna get everybody was so we're gonna get too -- two and a half percent growth in the April through June Korda now we hear contraction.
What do you make of that.
Well I'd be surprised if we had contraction in the second quarter.
But the economy does appear to have slowed.
The first quarter was one point 8% which is not not good enough and that last quarter of last year was was also disappointing the slowdown relative to the preceding year.
-- I think I see no reason why.
For forecasting at the second quarter will be negative but there's no question that the economy is not as strong as we would like is this because of sequester cuts in government spending.
And tax increases that took effective January the first -- is that what's going on here.
I think I think it is the expiration of the payroll tax holiday in January and -- sequester.
I mean if you look at the breakdown different components of -- GDP where the -- this is expanding and -- contracting or you look at employment they tell the same story and have for awhile.
Which is that the government is contracting.
And we're also losing net exports an enemy that -- to produce documents about somebody -- divide it's -- the consumer for consumption -- for investment the government -- -- government spending on goods and services.
Or foreigners and those last two have been contracting so that's that's a surprising that we had any growth at all.
So what are we going here coming at you when you've -- always factors as to why we've got a pretty much dead flat economy.
Where are we going in the future and -- did you see it any source of real growth for America.
Well I'm -- we can take some encouragement from the fact that even this terrific performances better than our our trading partners all all the major industrialized countries.
Are either in contraction in the case of many European countries back in recession.
Or else are growing more slowly than.
Then then we are.
So I suppose that's encouraging on the other -- that's really why -- net exports aren't aren't doing very well.
The Federal Reserve seems to be a little more optimistic than that then some of us.
And then thing and does it seem to think that that maybe maybe growth will will -- go back about 2%.
If if you know we're not used to this we're used to -- -- economics professor talk about redistribution.
Not growth so let me ask if this.
If we went out there and exploited America's energy res the stuff that -- golf but is hours -- UN after it -- we pump while oil only Frankfurt gas.
And we have tax reform.
-- writes fewer deductions.
Could we get to 5% growth.
5% got that thing at a steady thing now I don't think so the fracking revolution and it is already happening -- is is a positive is a bright spot in that.
In in the overall picture I don't think we have to like you know subsidize it or throw away all environmental.
You know -- caution at all I think I just proceeding -- we've got with a little some safeguards against it's an ecological disasters with.
Would you know we're doing fine -- sort of -- -- the price of natural gas has gone down enough that.
That I don't I don't think -- that's putting a natural limit on -- I don't think any further government encouragement would really yeah.
And solving the long term fiscal problem not a short artist who promised there really isn't any -- -- the long term fiscal problem entitlements problem.
I think that would give some encouragement to growth especially in the long term.
Yeah that's what we will waiting fuel growth give his growth professor one of the more like you at home and -- them.
Professor Jeffrey Frankel -- thank you very much for --
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