Stronger Recovery Held Back by Washington, Welch Says
The U.S. economy is well on the road to recovery, but would be doing better if not for a repressive environment in Washington, Jack Welch, author and former General Electric chairman, told CNBC Monday.
Businesses are generating much stronger revenue and consumers have slashed debt, Welch pointed out, though he said unemployment will remain a problem well into the future.
"Clearly the debt burden on the consumer has dropped dramatically," Welch said. "The consumer's in better shape than they were two years ago, whether it be write-offs or whatever they did. The consumer debt is better than it has been."
Unemploymentfell last month to 8.5 percent and the private sector created 212,000 jobs in December, according to data released last week from the Bureau of Labor Statistics, which said the net number of new jobs including the public sector was 200,000.
Other economic metrics have improved as well, particularly in the areas of manufacturing and consumer and business confidence.
Welch said progress is continuing, though there will be bumps along the way.
"The natural effect of the cycle has not been repealed. We're going to get some strength now. This whole thing could have been accelerated with better policies," he said. "At this point in the cycle after the Reagan recovery, we were doing 800,000 to a million jobs a month. We're getting all excited about 212,000...Let's not go overboard. Things are good, (but) things could be a lot better."
One major area of optimism: Housing.
Welch said a combination of low prices and record-low interest rates have helped the battered real estate market hit bottom and get ready to rebound, perhaps even stronger than many economists expect.
"Housing has pretty well bottomed and rental prices are going up. Vacancies are almost non-existent," he said. "So you've got a lot of forces driving toward the housing market. Prices are down, interest rates are down, the affordability index is good...We think it could be a blowout. Housing could be really good based on all the dynamics that are out there."
The big area of pessimism: Washington politicsand a climate pushing greater regulation and demonization of the wealthy.
Welch cited several examples, including a provision in the Americans With Disabilities Actrequiring government contracts to hit a 7 percent quota for disabled workers on their payrolls, and the plethora of inspections and auditors haranguing business to comply with picayune details.
"This isn't how you grow an American economy," he said. "A great economy grows with innovation, with great people, with a president yelling, 'We're going to grow,' not saying, 'You rich bastards.' ... No, we're going to grow and we're all going to grow together. I'm not going to divide you from you, we're all a 'team growth,' we're team America."
More specifically on politics, Welch said he favors Republican presidential front-runner Mitt Romney, whom he called "the most qualified leader I've ever seen run for president of the United States."