It's fun to hear the talking heads on cable debate about Federal Reserve policy and the Bush tax cuts, but wouldn't it be nice to know what actual professional economists really think? The National Association of Business Economists provides precisely that. In its August survey it asks these questions, and show that, while there's no clear view on the best monetary policy, there's some consensus on whether to allow the Bush tax cuts to expire.
First, how do the business economists feel about the Federal Reserve's action lately? Good, but not great:
While 59% is still a pretty decent approval rating, it's clearly trending downward from the 70% of economists who thought the Fed was doing a good job a year ago. Of course, economists are significantly more cynical about fiscal policy, where only 39% believe lawmakers are taking the right actions.
But the decline in monetary policy confidence isn't due to one reason. The business economists were all over the map on what the right policy should be. They were nearly evenly split between more restrictive, more simulative, and unchanged policy, with 36%, 33%, and 31% respective respondents urging each strategy.
In terms of the price level, deflation concerns dominated with 45% saying it was more of a risk in the near-term than inflation was in the long-term. Another 16% saw outright deflation as the bigger risk, while 15% saw outright inflation a significant danger. The other 24% believed neither risk dominates.