Richard W.
Posted on 08/04/2002 9:55:37 PM PDT by DeaconBenjamin
PORTLAND (Oregon) - The United States economic recovery is intact, Federal Reserve Bank of San Francisco president Robert Parry said, and the central bank would act 'very decisively' in the event growth stalls.
He said the Fed will remain watchful of further signs of economic weakness and made it clear in a speech to business leaders in Portland that he does not expect the economy to reverse course.
'If we were to see, as a result of either miscalculation, or as a result of some outside event, the economy stall, I think the Federal Reserve would take that into account and act very decisively,' he said.
His comments, which came in response to a question following his remarks, suggest the central bank might lower the benchmark overnight bank lending rate from its current 41-year low of 1.75 per cent.
'I'm not convinced at the present time that the economic expansion is seriously threatened,' he added.
'There are a lot of conflicting signs but I don't still think there's a high probability or even a significant probability to what is often referred to as a double-dip.'
Consumer spending on non-durable goods is likely to rebound from declines in the second quarter, and gross domestic product (GDP) will probably grow at a 3 per cent annual rate or more in the second half of this year and next year, he said.
The economy's recovery from a recession that began in March last year remains on course as low interest rates; rising business and consumer spending; and a weaker dollar boost growth, he added.
A Commerce Department report last Thursday showed that the GDP grew at an annual rate of 1.1 per cent from April to June, compared with 5 per cent in the first three months of the year. -- Bloomberg News
One of the purposes of those interest rate cuts was to shift money to the stock market, as comparatively a better place for savings than CDs, etc. It doesn't seem to work that way though. When the interest rates go down, people tend to remortgage their houses and go on spending binges.
Meanwhile, those that are responsible about their economic picture have, in many cases, given up on the stock market, pulled their money out, and put it in something safer.
I love these articles that predict the future. I'd take what any one of these experts say seriously...if two years ago they had said interest rates and stock market valuations would be at this point today!
I think they're already doing that. Arete might know how much money they've added over the past few months.
But, help me here. At some point do we get inflation and higher interest rates? But, right now the prices on some goods are so low they're silly. Didn't it take a catalyst in the '70s (ie: oil embargo) to cause things to spin out of control? And I read some things this weekend about the government increasing oil stockpiles, I would imagine to avoid just such an occurance.
That's what's so fascinating. Can the government do enough to prop things up? I would think immigration and globalism are a big part to the scheme. But people are getting pretty upset with those initiatives. One wonders what will happen after the elections, when those elected will get in office again without these things coming up and affecting who ends up in office.
Richard W.
Richard W.
How much money can be added to the supply, and how much of it can be thrown around the world, before it loses value? I'm not hearing any of the cheerleaders talking about that.
I agree. Both suppress wage inflation. Some things, things that are capital intensive like cars and houses, have inflated at incrediable levels. So have things that demand highly skilled labor like medical costs. Those things show an increasingly worhtless dollar. Other things, that are made by unskilled labor and don't use a lot of expensive raw materials to produce, are absurdly cheap- the labor to make them are slaves in the PRC.
Inflation is too much money chasing too few goods. With easy to make goods, there are so many now due to productivity increases that there is NO inflation in those items. But the inflation is there. It will be amplified if the dollar loses value, because other countries like to hold dollars. This allowed the fed to dump in a lot of new dollars, knowing that there was a demand for them as a reserve currency. If that ever stops, if those nations start dumping dollars, it will casue an inflationary collapse of the dollar like we have never seen in America.
That's true, but for the consumer the cost increases have been softened by the lower interest rates. I really like what you wrote about there basically being two inflation rates (in reality, not in reporting).
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