Robert Genetski, one of the nation's premier interest-rate forecasters, blamed an erosion in economic freedom for a sharp decline in U.S. efficiency.
Genetski, known for his conservative outlook and research of classic economic principles, told about 400 business leaders Thursday that the decline in economic freedom is attributed to a rapid increase in government spending and regulations, violations of the rule of law and federal policies that reward some businesses at the expense of others.
Genetski's forecast, delivered with humor, was the highlight of the 10th annual economic breakfast in Palatine sponsored by Cornerstone National Bank & Trust Company.
"Bob was true to form, informative and entertaining. He expressed the challenges the country has before it. I'm afraid there's not a lot of good news," said Cornerstone CEO and Chairman Tom MacCarthy. He added that the session was timely with what's going on with the federal government as well as Cornerstone's 13th anniversary that took place Wednesday.
He added that the economic breakfast is an additional resource when people are trying to plan for the future.
The near future does not look bright, Genetski said, again pointing to economic freedom. He said the Fraser Institute of Canada once classified the U.S. as the third freest economy in the world. By 2011, the nation fell to 19th.
"When the U.S. was among the freest economies in the world, strong productivity gains led to a doubling in living standards every 32 years. With recent productivity trends, it will take 100 years to double living standards," Genetski said. "The public knows something is wrong. However, they are unaware of the decline in economic freedom or its relationship to sluggish economic growth."
We asked Genetski several other questions relating to the economy:
Q: Over the past couple years you have reported very modest improvement in the business climate due to lack of jobs. How is the business climate looking now?
A: The economy remains sluggish. Job growth is up, but from a slow base. Not much has changed over the past few years.
Q: What can we expect over the next year in terms of the economy?
A: I expect to see more of the same. Growth is likely to remain sluggish. Living standards for most have been falling and are likely to continue to decline.
Q: What industry will lead the way in job creation in the upcoming year?
A: Health care and consultants to the health care industry.
Q: Anything else we should look out for in the upcoming year?
A: Given the rapid increase in federal debt, we should expect more "crises" related to efforts to slow the growth in future government commitments.
Q: What is the attitude of the consumer about spending?
A: Consumers' budgets are constrained by the growth in government spending, taxes and regulations. This is particularly true for Illinois' taxpayers who experienced major tax increases last year. These increases not only took money from consumers, they will also lead to a loss of business and jobs for Illinois.