In the tightening race for the White House between incumbent President Barack Obama and GOP challenger Mitt Romney, the main issue remains the sluggish economy. 163,000 new jobs were added in July. However the nation’s unemployment rate inched up to 8.3 percent from June’s 8.2 percent.
The Federal Reserve’s recent Flow of Funds report showed that U.S. nonfinancial companies held $1.7 trillion in liquid assets at the end of March. These companies have been reluctant to expand. University of South Carolina research economist Dr. Joseph Von Nessen says businesses have fear of the unknown and are sitting tight until after the November election. Once the election is over Von Nessen say businesses are more likely to move forward no matter who wins the White House.
“What the election tends to do is give people confidence in what’s coming,” he told South Carolina Radio Network, ”Regardless of whether a particular employer or business owner agrees or disagrees with however the election goes, they will have a better idea of the policies that are coming and they can plan their business activity accordingly”
Von Nessen says the uncertainty of the market and the question of what economic policies may come out of Washington have businesses standing pat for now. “I think uncertainly is really the killer of growth. It paralyses you. Because you don’t know what’s coming, ,you can’t respond appropriately and so you’re more likely to do nothing, to just sit tight.”
Von Nessen says businesses are weighing their options as they anticipate the outcome of the November vote. “The biggest positive coming from the election is that it will hopefully tend to reduce some of that uncertainty, especially domestically, so that people will be more confident as to what they think may happen in 2013 and that might spur some action.”