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The 3 Drivers of US Consumers Hit a Wall

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Navigating the Regulatory Labyrinth – Insights from NAM and CEI Reports

The landscape of federal regulations in the United States has always been complex, but recent reports from the National Association of Manufacturers (NAM) and the Competitive Enterprise Institute (CEI) highlight just how labyrinthine it has become.

The Resurrection of the Regulatory Cost Report

For decades, the Small Business Administration's Office of Advocacy produced a report every five years assessing the impact of federal regulatory costs on the American economy. However, these reports ceased under the Obama Administration when regulatory costs skyrocketed. Enter Dr. Chad Moutray, the former Chief Economist for the Office of Advocacy, who, upon joining NAM, revived this crucial report, employing the original economists for renewed analysis. The 2023 NAM report's findings are as alarming as they are unsurprising, confirming projections by the Center for Regulatory Freedom: federal regulations cost the American economy over $3 trillion per year.

NAM's Alarming Findings

The NAM study of 2023 paints a dire picture:

  • Federal regulations in 2022 cost an estimated $3.079 trillion, 12% of U.S. GDP.

  • The average U.S. company spends about $13,000 per employee annually on regulatory compliance, but for manufacturers, this cost jumps to over $29,000.

  • Small manufacturers, with fewer than 50 employees, bear the brunt with costs around $50,100 per employee per year.

  • There's been a 26% increase in costs for manufacturing firms since 2012.

CEI's 2023 10,000 Commandments Underscores The Problem

Wayne Crews' report for the Competitve Enterprise Institute, titled "10,000 Commandments," provides additional context to the regulatory scene:

  • Under President Biden, there's been an escalation of campaigns on equity, climate, and other progressive ends.

  • The final rule count stood at 3,168 at the end of Biden’s second year, a drop from the first year but still significant compared to historical figures.

  • The report estimates regulatory compliance and economic effects of federal intervention at least $1.939 trillion annually.

  • U.S. households face an average hidden regulatory tax of $14,514 annually.

  • The Unified Agenda under Biden shows a high count of 3,690 upcoming regulatory actions.

The Impact and Future Trajectory

The growing regulatory burden impacts business dynamics significantly. NAM's report suggests that reducing these costs could greatly enhance competitiveness, especially for manufacturers, allowing funds to be reallocated to growth initiatives.

10,000 Commandments further emphasizes the scale of this challenge, with an increasing number of rules and regulations in the pipeline. This trend, if continued, could lead to a staggering regulatory cost of $7 trillion per year by 2030.

Conclusion: A Call for Balance

Both reports underscore the need for a critical reexamination of the regulatory framework. Policymakers and industry leaders must find a balance in regulatory practices to foster an environment conducive to economic growth and innovation. Without significant changes, the U.S. faces a future burdened by an even more massive regulatory framework, impacting all sectors, especially small businesses and manufacturers.

These insights are not just a wake-up call but a clarion call for action to avoid an overwhelming regulatory landscape by 2030.


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