Economist says U.S. growth poised to ‘take off like crazy’

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Posted: Friday, January 24, 2014 12:00 am | Updated: 11:11 am, Tue Mar 25, 2014.

The U.S. economy is set for healthy growth, an Omaha economist said Thursday, but uncertainties including federal government policies could slow things down.

Creighton University economist Ernie Goss told a business group that the economy could grow as much as 5.5 percent this year, which would be the highest growth rate since 2006.

“The economy could take off like crazy,” Goss told about 125 people at an Association for Corporate Growth meeting at Happy Hollow Country Club, with the energy sector contributing strongly to growth.

Potential restraints, however, include the government’s energy policy, which he said seems to advocate higher energy prices to encourage people to conserve energy.

Goss said policies that would cause higher prices, such as restricting “fracking” or rejecting the Keystone XL pipeline, hurt the average person, and the government should “get their foot off the neck of the energy industry.”

Factors favoring economic growth include today’s low interest rates, bargains in real estate and strong international trade due to the relatively weak U.S. dollar, he said.

Factors that could slow growth include higher government debt, taxes and interest rates, politically motivated restrictions on trade and uncertainty over programs such as the Affordable Care Act.

Goss said he thinks the government eventually will have to bail out health insurance companies because too few healthy people are signing up for policies required under the federal health care law.

Instead, older people with more health problems and higher claims will cause health insurers to lose money, he said, and eventually the government will have to rescue them to preserve its health care program.

Also Thursday, Moody’s Investor Services downgraded its outlook for U.S. health insurers to “negative” from “stable,” citing an “ongoing unstable and evolving environment” under the federal law.

Stephen Zaharuk, a senior vice president at Moody’s, said in a report that 24 percent of the people enrolling for coverage through Dec. 31 were between 18 and 34, the ages with the lowest health claims.

That’s “well short” of the law’s 40 percent target, he said, and may not be enough to make up for older people who will have more health problems and higher claims. Taxes levied through the law might not be enough to cover the shortfall, Zaharuk said, which would hurt small insurance companies especially.

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