Economist Morton Marcus, a frequent advisor to the RV industry, believes the Federal Reserve will raise interest rates again, no matter who is elected president.
Marcus, director of Indiana University’s Business Research Center, said the Fed will raise rates again because Vice President Al Gore and Texas Gov. George W. Bush are advocating tax cuts and/or spending increases by the government that could rekindle inflation.
Marcus told the Elkhart, Ind., Rotary Club on Monday (Oct. 30), that the Fed might raise interest rates gain around the end of this year in order to keep inflation in check.
Bush, the Republican candidate, advocates distributing a large portion of the government’s projected budget surplus back to consumers in the form of tax cuts, while Gore, the Democratic candidate, supports higher government spending and a smaller tax cut for consumers. Both proposals are inflationary given the current high levels of spending by consumers and the government, Marcus said.
Instead, Marcus believes the surplus should be used bolster the Social Security and Medicare programs so they could remain viable once Baby Boom generation members retire in large numbers.
Marcus added that he also believes the stock market has been over-stimuated by 401-K money investments, which accounts for much of its volatility. Bush’s plan to allow individuals to invest a portion of their Social Security tax money in the stock market would add to the volatility, he said.