The recovery of the U.S. economy will continue to be sluggish, at least in part because of the burden of heavy government regulation, UCF economist Sean Snaith says in a national economic forecast released Wednesday.

Meanwhile, Snaith ponders whether China’s economy is “a pagoda of cards” that the nervous Chinese government is trying to prop up.

“After many years of double-digit real GDP growth, China’s economy appears to be slowing significantly,” Snaith writes in the quarterly forecast from UCF’s Institute for Economic Competitiveness. “Coupled with a stock market that is down more than 40 percent since June, the Chinese government is taking increasingly desperate measures to shore up both its economy and the stock market.”

When it comes to the U.S. economy, Snaith harkens back to the childhood game of freeze tag, which inevitably devolved into arguments over rules hastily invented mid-game.

“The rules of the game matter, whether the game is freeze tag or the U.S. economy,” Snaith said. “As the number and complexity of these rules grow, more time and resources are consumed by interpreting and adhering to these rules, with fewer resources allocated towards actually playing the game. In the case of the U.S. economy, playing the game may be interpreted as the production of goods and services.”

He specifically cites the Dodd-Frank financial regulatory reform law – passed in 2010 but still not fully implemented – as a poster-child of regulation run amok.

Highlights of the forecast include:

  • Real GDP growth in the third quarter of 2015 will be weighed down by inventory adjustment coming in at a tepid 1.9 percent.  Growth will end up at 2.2 percent in 2015, 2.6 percent in 2016, 2.7 percent in 2017 and 2.5 percent in 2018 as the Federal Reserve raises interest rates.
  • Unemployment rates are expected to fall slightly to 5.3 percent in the fourth quarter of 2015. Unemployment will stabilize at that level before drifting slightly upward in 2017. Underemployment remains a persistent problem and currently stands at 10.4 percent.
  • Payroll employment growth remains sluggish.  Employer mandates from the Affordable Care Act enforced in 2015 and 2016 will weigh on private sector hiring, especially for full-time jobs.  Consequently, payrolls will expand 2.1 percent in 2015 and 1.4 percent in 2016 and 2017, before easing to just 1 percent in 2018.
  • Consumer spending is a bright spot. The labor market continues to recover, though wage and salary growth remain elusive, housing prices continue to climb, restoring lost home equity, and oil and gasoline prices are in decline again whilst consumer sentiment remains high relative to the doldrums of the recession.  As a result, consumer-spending growth is expected to accelerate to around 3 percent in 2015 and 2016. This would be the fastest rate of consumer spending growth since 2006.

    • Snaith is a national expert in economics, forecasting, market sizing and economic analysis who authors quarterly reports about the state of the economy. Bloomberg News has named Snaith as one of the country’s most accurate forecasters for his predictions about the Federal Reserve’s benchmark interest rate, the Federal Funds rate.

    Snaith also is a member of multiple national forecasting panels, including The Wall Street Journal Economic Forecasting Survey, CNNMoney.com’s survey of leading economists, the Associated Press Economy Survey, the National Association of Business Economics Quarterly Outlook Survey Panel, the Federal Reserve Bank of Philadelphia’s Survey of Professional Forecasters, the Livingston Survey, Bloomberg U.S. Economic Indicator Survey, Reuters U.S. Economy Survey, and USA Today Economic Survey Panel.

    The Institute for Economic Competitiveness strives to provide complete, accurate and timely national, state and regional forecasts and economic analyses. Through these analyses, the institute provides valuable resources to the public and private sectors for informed decision-making.