In my Quixotic quest to find evidence for “policy uncertainty” holding back our recovery, the closest thing I’ve heard to a reasonable and measurable indicator is low “US fixed capital investment.” Alan Greenspan has been trumpeting this metric for at least over a year now. He also uses this example to question the wisdom of the stimulus package. But looking at fixed investment, it’s not apparent that it’s being held back by any change in regulation or fear of future taxes as Greenspan argues.
It’s obvious that investment levels aren’t back to pre-recession heights, yet the trend is clearly recovering from the depths of the recession. In contrast, we have this chart from Jared Bernstein that shows that the stimulus package certainly wasn’t inconsistent with economic growth.
Notice that as fiscal and monetary stimulus begin to run down close to the present we see weaker growth. This correlation isn’t proof, but I’m still waiting on a believable counter-explanation for this data.