'We Should Be Doing Better,' Welch Says of US Economy
The U.S. economy is missing its full potential because of political stubbornness in Washington and regulations that discourage production, businessman and author Jack Welch told CNBC.
Pointing to the Environmental Protection Agency and the Occupational Safety and Health Administration in particular, Welch said rules imposed by "those grunts down in the organizations" are hampering business.
EPA administrator Al Armendariz was forced to resign in April after saying the agency should "crucify" oil and gas companies. OSHA, meanwhile, recently released a memo directing businesses to re-evaluate awards for workplace safety programs, cautioning that such incentives can discourage reporting of injuries.
And in Congress, lawmakers have yet to deal with the so-called fiscal cliffthat will come when tax increases and spending cuts kick in automatically at the end of the year if Congress fails to come up with a deficit-reduction plan.
"We should be poised to do well, but we are getting hammered by political forces who won't deal with the fiscal cliff coming up," said Welch, former CEO of General Electric , which is minority owner of CNBC and CNBC.com.
All in all, he said the U.S. is in better shape than some of its other competitors, especially in the slowing emerging market economies. But Welch lamented that the country is still not reaching its potential.
"We should be doing better," he said. "We have free money, we have pretty strong markets, gasoline is coming back. Housing is in fact not going through the roof but is coming back. Rents are at all-time highs, mortgages are at all-time lows, affordability is perfect. So housing is going to come back."
Welch compared 2009, when President Obamatook office, to the early 1980s when Ronald Reagan became president.
Both had economies that were recovering from recession, with gross domestic product growth in the fourth quarter of 2009 at 3.8 percent. GDPpeaked at 3.9 percent in the first quarter of 2010 but has dropped off steadily since, hitting 1.9 percent in the first quarter of 2012.
The Reagan recovery, by contrast, sustained itself, with quarterly growth falling below 2 percent only twice in his eight years in office.
Welch said the stifling business climate is to blame for why growth hasn't been better.
"Basically these are the things that are going on every day. They add up," he said. "That's why we're not taking off."