Sequester Forcing Washington to Negotiate a Better Solution Says BNY Mellon's Richard Hoey Great Disasters Dodged; Economic Expansion Expected in 2013
NEW YORK and LONDON, Feb. 21, 2013 /PRNewswire/ -- Dissatisfaction with the badly-designed U.S. sequester may be used to help motivate a "mini-bargain" compromise to replace the initial year of the sequester, according to BNY Mellon's Chief Economist Richard Hoey in his most recent Economic Update. Hoey thinks this compromise may retroactively reduce the size of the planned fiscal drag.
"The sequester was intentionally designed to be bad economic policy in order to motivate a political compromise on a better substitute," says Hoey. "The adoption of a fiscal policy intentionally designed to be dysfunctional in its impact appears to be a unique American policy innovation, one unlikely to be copied by other countries," he continued. "If the sequester goes into effect, it could be followed by a compromise on a better-designed substitute within a few weeks."
Other report findings include:
Great Disasters Dodged and Financial Conditions Eased – Extreme negative scenarios were avoided last year – China avoided a hard landing. The European financial crises and recession did not produce a meltdown or breakup of the euro. Last-minute legislation mitigated the magnitude of the scheduled U.S. tax increases / fiscal cliff – all of which, according to Hoey, have led to global financial easing.
Economic Expansion Expected – Hoey expects 2013 to be another year of expansion at a sluggish average real GDP growth rate somewhat above 2%, with growth likely to be slower earlier in the year and faster later in the year.
Core Europe Near Transition – Hoey states that core Europe is near a transition from a full-scale recession to a hesitant economic recovery at a very subdued pace, while peripheral countries are likely to remain in recession throughout 2013.
See http://www.bnymellon.com/foresight/update-video.html for Hoey's complete February 2013 Economic Update.
Notes to Editors:
BNY Mellon Investment Management is one of the world's leading investment management organizations and one of the top U.S. wealth managers, with $1.4 trillion in assets under management. It encompasses BNY Mellon's affiliated investment management firms, wealth management services and global distribution companies. More information can be found at www.bnymellon.com.
BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment management and investment services in 36 countries and more than 100 markets. As of December 31, 2012, BNY Mellon had $26.7 trillion in assets under custody and administration, and $1.4 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available on www.bnymellon.com, or follow us on Twitter @BNYMellon.
All information source BNY Mellon as of December 31, 2012. This press release is qualified for issuance in the UK and US and is for information purposes only. It does not constitute an offer or solicitation of securities or investment services or an endorsement thereof in any jurisdiction or in any circumstance in which such offer or solicitation is unlawful or not authorized. This press release is issued by BNY Mellon Investment Management (US) and BNY Mellon Asset Management International Limited (ex-US) to members of the financial press and media and the information contained herein should not be construed as investment advice. Past performance is not a guide to future performance. The value of investments and the income from them is not guaranteed and can fall as well as rise due to stock market and currency movements. When you sell your investment you may get back less than you originally invested. Registered office of BNY Mellon Asset Management International Limited: BNY Mellon Centre, 160 Queen Victoria Street, London, EC4V 4LA. Registered in England no. 1118580. Authorized and regulated by the Financial Services Authority. A BNY Mellon Company.
SOURCE BNY Mellon