It is oft remarked that when the US sneezes, the rest of the world catches a cold. Given the slew of poor data in recent months, then, the risk of a double dip in the world’s largest economy is of mounting concern to policymakers around the globe.
Central bankers from Sweden and Japan have both touched on the issue in recent weeks.
This from the Bank of Japan’s minutes for its mid-June policy meeting, released Friday:
An Ivy League handover may be in the cards for the post of National Economic Council director, president Barack Obama’s top economic adviser. Departing the White House is Larry Summers, former head of Harvard University, who will be returning to the famed Boston institution to teach, after delivering his farewell speech at the Economic Policy Institute on Monday. Potentially arriving is Rick Levin, an industrial economist – and president of Yale University since 1993 - who has already been active in Washington and is being considered for the job.
Mr Levin is facing competition from at least two other potential candidates – Roger Altman, the investment banker and former deputy treasury secretary who chairs Evercore Partners, and Gene Sperling, an adviser to the treasury department who recently played a big role in forging the deal with congressional leaders on the Bush tax cuts. There may be others in the mix too. ”The president is interviewing a number of qualified candidates and no decision has been made,” an administration official said on Tuesday.
Mr Levin would make a good choice for Mr Obama on several levels.
Better late than never. After months of congressional wrangling, Barack Obama, US president, finally signed into law a bill designed specifically to help small businesses.
Although their importance is sometimes overstated – many small companies make their money off the health of large corporations – they are nonetheless an important source of economic output in their own right, and that energy has definitely been lagging in this economic recovery.
The Obama administration’s answer to the problem is a $30bn fund that allows banks to receive capital injections with increasingly favourable interest rates the more they can prove that they are lending money to small businesses. This should offer some relief against the lack of credit that is hampering some small companies. In addition, there are also some $12bn in tax breaks in the legislation, which will hopefully lead to more hiring.
“So this law will do two big things. It’s going to cut taxes, and it’s going to make more loans available for small business,” Mr Obama said. “It’s a great victory for America’s entrepreneurs.”
But whether or not this moves the economic needle in any way is very much open to debate.
Jeffrey Lacker, president of the Richmond Fed, today gave an upbeat view of where the economy is heading in 2010. So upbeat, in fact, that explicitly answered the question: How can economists be so optimistic?
His view for 2010:
Putting the whole picture together, I think the most likely outcome is that the economy will grow at a reasonable pace this year – housing should continue to recover from a very depressed state, consumers should gradually expand spending, business investment should make something of a comeback, and these components of demand should overcome a continuing drag from commercial construction.
His explanation for his optimism: