Government Regulations Cost US Companies $4-T+

Government Regulations Cost US Companies $4-T+

Government Regulations Cost US Companies $4-T+


The cost of US regulations is larger than Germany’s economy, amounting to a $4-T loss to the American economy, according to a report Thursday.

The study by the Mercatus Center at George Mason University found that regulations over the past several decades amount to a loss of $13,000 for each American worker.

“The impact of regulation on economic growth has been widely studied, but most research has focused on a narrow set of regulations, industries, or both,” the report stated. “These studies typically rely on regulatory indexes that measure subsets of all regulation, on country-to-country comparisons, on short time spans, or on surveys in which experts report how regulated they believe their country or industry is,” the report said.

The study’s researchers studied data from 22 industries from Y’s 1977 to 2012, finding regulations have distorted “investments choices that lead to innovation” and have “created a considerable drag on the economy.” The result: an average shrinking of the economy by 0.8% a year.

“If regulations had been held constant at levels observed in Y 1980, the American economy would have been 25% larger than it was in 2012,” the report said. “This amounts to a $4-T loss in 2012 for the American economy or $13,000 loss per person, a significant amount of money for most American workers.”

The cost of federal regulations amounts to the 4th-largest GDP in the world, surpassing the economies of Germany, France, the United Kingdom, Brazil, Italy, Russia, and India.

And the stacking on of regulations is expected to continue.

The Obama Administration is racing to make final a flurry of regulations affecting broad swaths of the economy, further riling US businesses in an election year that has already been tough on corporate interests.

The expected burst of regulation follows an intense few weeks in which the administration has targeted corporate tax inversions, imposed new rules on brokers and advanced restrictions on company relations with union organizers.

The moves have drawn sharp reactions from business groups.

After the tax rules, a top US Chamber of Commerce official said “politicians bullying America’s job creators.” The Head of the Business Roundtable, which represents big-company CEOs, criticized “unilateral action” by the administration.

Thursday, US major stock market indexes finished at: DJIA -210.79 at 17830.76, NAS Comp  -57.85 at 4805.29, S&P 500 -19.34 at 2075.81

Volume: Trade was heavy with over 1-B/shares exchanged on the NYSE

  • DJIA +2.3% YTD
  • S&P 500 +1.6% YTD
  • Russell 2000 +0.4% YTD
  • NAS Comp -4.0% YTD
HeffX-LTN Analysis for DIA:  Overall Short Intermediate Long
Bullish (0.31) Bullish (0.28) Bullish (0.32) Bullish (0.33)
HeffX-LTN Analysis for SPY: Overall Short Intermediate Long
Bullish (0.33) Neutral (0.22) Bullish (0.36) Bullish (0.39
HeffX-LTN Analysis for QQQ:  Overall Short Intermediate Long
Neutral (-0.05) Bearish (-0.28) Neutral (-0.14) Bullish (0.26
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Bearish (-0.42) Bearish (-0.48) Bearish (-0.28) Very Bearish (-0.50)

Stay tuned…

Paul Ebeling

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