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Editor’s note: ‘Uncertainty’ is the only certainty for now

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When I’m out hobnobbing, my usual conversation starter is to ask the executives I encounter “How’s business?”

Invariably, I get a positive response. But I was struck by the awkward pauses I heard from business leaders at the Greater Washington Board of Trade’s get-together last week.

It seems a great many companies find themselves stuck in a holding pattern, trying to figure out where the economic winds might blow, and whether our elected leaders will be able to reach some consensus on budget policy.

More than one complained of “uncertainty,” and their tone left no doubt they consider that an ugly word.

This sentiment has not escaped the notice of those with their hands on the levers of the country’s monetary policy. Jeffrey M. Lacker, president of the Federal Reserve Bank of Richmond, which oversees the metropolitan Washington area, observed as much in a speech last week to the Roanoke Regional Chamber of Commerce

“Uncertainty is likely to continue to dampen U.S. growth until there is greater clarity about legislation that Congress and the president are likely to adopt. But merely avoiding the fiscal cliff is not likely to be enough. Fiscal uncertainty will continue to restrain growth, I believe, until Washington adopts a long-run plan that restores fiscal balance.”

He’s not expecting a quick turnaround.

“My best guess is that growth will begin to firm later next year and continue to improve beyond that. While the recession in Europe poses risks for this outlook, I think those risks will likely dissipate next year as leaders work through the adjustments necessary for creating a new fiscal regime. As U.S. labor markets continue to heal, I expect household confidence to slowly firm and bolster consumer spending.”

Lacker, noting that it typically takes time for economies to recover from severe shocks, said he is cautiously optimistic about the nation’s outlook. My highly unscientific canvas suggests others are not so certain.

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