Analysis: Federal Regulations Have Significant Negative Economic Impact

According to a macro-economic analysis commissioned by the Manufacturers Alliance for Productivity and Innovation (MAPI), federal regulations have a significant and adverse impact on the American economy. The study examined the qualitative and quantitative impact of major federal regulations on the U.S. economy in general and the manufacturing sector in particular.

The study focused on five types of regulation that have the most significant impact on the manufacturing sector: financial, labor, energy, environmental, and transportation.  The study analyzed over 30 years of all regulations, and developed several alternative calculations of the direct costs of major regulations to evaluate the macroeconomic consequences of major regulations.

Key Findings

• The pace of US federal regulations is accelerating. An average of 72 major regulations per year have been promulgated since 2009, compared to an average of 45 per year between 2001 to 2008, and 36 between 1993 to 2000.
• This increase in federal regulations has hurt manufacturing output, especially in energy-intensive sectors. In 2012 alone, regulation may reduce manufacturing output by between $200 billion and $500 billion, and manufacturing exports may be 6.5% to 17% lower than they would be without the regulatory burden.
• In terms of the broader economy, regulations may reduce GDP by between $240 billion and $630 billion this year, and cut the average household’s purchasing power by between $1,800 and $5,000.
• Although the study's estimates do not factor in the benefits of regulations, they can be used to help identify the cost of regulations, areas where regulatory review may be best focused, and the impacts of allowing regulations to expand at their current rate.

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