Staff at the Federal Reserve Bank of San Francisco, home to Janet Yellen, the freshly-nominated Fed vice-chair, have just offered some fresh insight into their thinking on the shape of the US recovery.
In a 4-page letter published today, researchers Justin Weidner and John Williams took a close look at the pace of economic rebounds from previous recessions, starting in the post-second world war period, and conclude that this time around, US growth will reach nearly 4 per cent this year, and about 3.5 per cent next year. Read more
Ben Bernanke, Federal Reserve chairman, earlier today cited “residential and nonresidential construction” as a headwind to the “moderate” economic recovery. But he also said that consumer spending will be boosted by “a gradual pickup in jobs and earnings, the recovery in household wealth from recent lows, and some improvement in credit availability.”
Household wealth is, of course, comprised of many types of assets, including retirement portfolios and other equity and bond investment holdings. But one of its major components is home values.
So is that portion of household wealth likely to grow? See the somewhat downbeat graph. Read more
Ben Bernanke, Federal Reserve chairman, has predicted that a “moderate economic recovery” would unfold in the US over the next several quarters on the back of stronger spending by businesses and consumers.
In testimony before the Joint Economic Committee in Congress, Mr Bernanke offered a slightly more upbeat outlook for the economy than he had in recent remarks, suggesting that the recovery is gaining traction. Read more
Janet L. Yellen, president of the Federal Reserve Bank of San Francisco, today spoke of an ‘impressive’ turn-around in GDP and said that the tide of dismal economic news ‘appears to have turned.’ But there the upbeat message of the a leading dove ended.
The annual 5.7 per cent growth in fourth quarter GDP was unlikely to be sustained, she argued.
Unfortunately, I’m not at all convinced that a V-shaped recovery is in the cards. That fourth-quarter leap in GDP overstates the underlying momentum of the recovery.
The reason for her scepticism in the sustainability of last quarter’s growth was, of course, the same as everyone else’s: most of it was due to a slowdown Read more
The Bank of Israel yesterday raised its 2010 growth forecast from 2.5 per cent to 3.5 per cent. Bank forecasts are now more in line with analyst expectations: last week, Bank Leumi raised its forecast to 3.5 per cent and on Sunday, Bank of America Merrill Lynch did the same. An increase in demand for exports is driving the recovery, and the optimism.
The main assumptions underlying the 2010 forecast are that global trade will increase 7 per cent, terms of trade will deteriorate by 2.1 per cent. Unemployment is expected to fall below 7 per cent by the end of 2010. Details of the forecast and assumptions are below: Read more
The US will have a jobs rich recovery while Europe will have a jobless one. That is the unspoken conclusion of the OECD’s latest Economic Outlook, writes Chris Giles of the Financial Times. It uses some wonderful charts as evidence for its case. Read more
More encouraging unemployment figures from the UK exacerbate the divide between most European labour markets and that in the US this recession. There are many possible explanations writes Chris Giles of the Financial Times, but the result must be a more optimistic Bank of England when it examines the prospects for recovery. Read more
An increasingly bitter dispute among economists is raging over the accuracy of the preliminary official figures showing a 0.4 per cent economic contraction in the third quarter. But a spirited defence of the official figures from Danny Gabay of Fathom Consulting is seriously flawed writes Chris Giles of the Financial Times. The logic of his view is that the benefit of hindsight is strictly time-limited.
By any account, the UK’s third quarter contraction of 0.4 per cent is bad, writes Chris Giles of the Financial Times Read more
If US retail sales figures were driven by auto sales, what will happen when the various cash-for-clunkers programs stop? The dollar may be the world’s new carry currency and global stimulus measures may be worsening future cycles Read more