Economist Mike Walden Speaks at Knightdale Chamber of Commerce

The following article is reprinted from the Eastern Wake News originally published on Jan 08, 2013 08:00 PM.

In Knightdale, economist’s optimism faces questions

Professor gives forecast for 2013 in Knightdale

By Paul A. Specht, aspecht@newsobserver.com

KNIGHTDALE – If Mike Walden’s listeners at a Knightdale restaurant last Friday believe, as he does, that the US economy will continue to grow steadily in 2013, it wasn’t reflected in their questions for him.

Walden, an economist and N.C. State University professor, again was the featured speaker for the Knightdale Chamber of Commerce’s annual Economic Forecast breakfast at Knightdale Seafood & BBQ. His take on the American economy was a familiar one: he used the exact same words – “cautiously optimistic” – to describe his feelings about the year ahead from the same podium in 2012.

Noting that the health of the economy depends on Congress’ ability to address federal spending and the debt ceiling, Walden cited rises in lending, job creation, and consumer spending as reasons gross domestic product could grow 2 percent.

Asked to give advice to small business owners, Walden said, “Get into expansion mode … this might be the year to break out.”

But, some in the 70-person crowd seemed less than certain.

Many of the questions involved possible changes to the tax code as part of a deal to increase the debt ceiling, which the federal government is expected to reach in March. By March 1, Congress must pass a plan to reduce spending lest many government programs take automatic 8 percent cuts.

One person asked Walden if government might cease tax deductions for those who give to charity. Another asked if the North Carolina General Assembly could pass sweeping tax reforms, as Governor-elect Pat McCrory wishes do to.

“What about mortgage interest deductions?” John Thoma, who works at a local hospice, asked Walden. “How could those impact the economy?”

Eliminating the tax deduction for mortgage interest has been mentioned as a possible means of raising revenue to reduce the federal debt.

Walden answered Thoma and others concerned about their W-2s by saying that reducing the number of available tax deductions and reforming the tax code is “heavy political lifting that I don’t think will get very far.”

While some business folk like Tom Rhoads, who owns a pet spa in Knightdale, believe the economy will expand “despite the politicians,” others like Ted Bachman, a business consultant, still have doubts.

“I’d love to have things work out the way (Walden) said, but I’m not so confident they will,” Bachman said, noting the country faces another fiscal crisis by March.

The deal reached by Congress last week to avert the fiscal cliff did nothing to restore his confidence, either.

“(Congress) must come up with a plan to reduce spending and put their petty politics aside,” Bachman said. “If something doesn’t happen in February, who knows where we’ll be?”