Day four of the Aspen Ideas Festival kicked off with an exciting interview with Peter Orszag, White House Office of Management and Budget Director.
Here's a sampling of what they talked about:
It’s Okay to Double Dip
Will there or won't there be a double dip? Although Orszag admits that that has been some degree of softening over the past month, he says it's normal. During a recovery, as things begin to improve, there is usually a tendency to fall back a little bit, and then improve again.
Orszag adds that the important thing is that the economy is seeing slow and positive growth adding, the risk of a double dip is better than "sluggish growth."
What A Drag
While the economy has some self-propelling momentum behind it, here are what he says are four big forces that can drag it down.
1) The inventory cycle will be coming off. What happens as the economy starts to recover is that firms that had drawn down their inventory begin to start them up again. This had added to economic growth, but by the end of this year, "it will add zero."
2) The Recovery Act. Even though it had added 2% this year, the effects of this act are tapering. That 2-3% will fall to maybe 1% next year.
3) State and local governments are facing $140 billion in deficits. The steps these governments will have to go through to rectify those deficits will drag on the economy.