Showing posts with label Federal Reserve. Show all posts
Showing posts with label Federal Reserve. Show all posts

Saturday, June 20, 2015

Outlier opinion

June 20, 2015 Alex Rosenberg , CNBC 0 Comments
Marc Faber: Recession Is Coming This Year

By Alex Rosenberg, Jun. 18, 2015, CNBC

Markets appeared to sigh in relief after the Federal Reserve got no closer to raising rates in its latest policy statements, but Marc Faber said there should be no need to worry about any interest rate increase.

"I doubt they would increase rates this year. I think they'll keep rates at essentially zero," Faber said Wednesday in a "Trading Nation" interview. "[Fed Chair Janet] Yellen said very clearly that the rate hikes are data-dependent, and data is globally getting worse, it's not getting any better."

To Faber's mind, America is in dire straits.

"I don't think the U.S. economy is doing particularly well," the editor and publisher of the Gloom, Boom & Doom Report said. "One of the problems is affordability, and cost-of-living increases. For most households, the cost of living has gone up very substantially and so their spending power is limited. In addition to that if you look at tax revenues in the U.S., corporate tax as a percent of GDP is essentially flat. However, what has gone up a lot as a percent of GDP is individual taxes, so it has some negative impact on the economy."

More: www.cnbc.com

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Sunday, June 8, 2014

Wall St. Journal: 5 Takeaways From Jobs Report --Not good

June 08, 2014 Alan Levenson , Federal Reserve 0 Comments
By Kathleen Matigan, Jun. 6, 2014, Wsj.com

1. THE LABOR FORCE PARTICIPATION RATE REMAINS LOW

The steady jobless rate, at 6.3%, may be masking more labor slack in the adult U.S. population. The labor force participation rate—a datapoint followed at the Federal Reserve—held at a decades-low of 62.8% in May. While some of the shrinking labor force reflects boomers retiring, the severe recession and weak recovery have also played a part. Economists think that absent the recession, the labor force-participation rate would be 64.6%

2. NO RENAISSANCE FOR MANUFACTURING JOBS

The manufacturing sector may be enjoying a renaissance, thanks in part to cheaper U.S. energy. But the gain in output has mainly come from more automation and productivity. Manufacturers may be booking new orders, but they aren’t hiring many new workers. Factory payrolls rose just 10,000 in May. Since the recovery began in mid-2009, factory output is up more than 25%; payrolls just over 3%.

3. HOURS WORKED IMPLIES FASTER GDP, OR SLOWER PRODUCTIVITY, IN 2Q

Alan Levenson, chief economist at T. Rowe Price, points out aggregated hours worked by production workers is growing at a 4.0% annual rate so far in the second quarter. Aggregate hours are viewed as an input into economic growth. So, the jump in hours means either gross domestic product is growing faster than the 3.5% or so rate economists are expecting. Or all of that output is being generated by new labor, and productivity will be weak again this quarter.

Read all five:  www.blogs.wsj.com

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Thursday, May 22, 2014

Charles Plosser Thinks There’s A Ticking Time Bomb At The Fed --Printing money out of thin air has consequences

May 22, 2014 Charles Plosser , Federal Reserve 0 Comments
Charles Plosser
By Jeffry Bartash, May 20, 2014, Blogs.marketwatch.com

The way Charles Plosser sees it, the Federal Reserve is sitting on a ticking time bomb that could severely damage the economy unless the central bank reacts quickly to defuse the looming threat.

The Philadelphia Fed president, viewed as one of the bank’s leading hawks, is worried about some $2.5 trillion in “excess” reserves. That is, loanable funds available to individual or corporate borrowers through the nation’s banks.

The Fed has created these reserves through unpredented purchases of U.S. Treasurys and mortgage-backed securities, a strategy known as quantatative easing.

These reserves are just sitting in the bank system, basically doing nothing. That’s because demand for loans has been unusually weak amid an economic recovery that’s the slowest on record since the Great Depression.

“These reserves are not inflationary right now,” Plosser said in a meeting Tuesday with reporters in Washington.

Yet if borrowing begins to surge and those reserves start to pour out of the banking system, Plosser worries, “that’s going to put pressure on inflation.” The result: the Fed could be forced to raise interest rates faster and earlier than it would like and perhaps slam the breaks on the economic recovery.

The Fed tried to avoid such a problem in the past simply by not creating so much excess reserves in the first place. If the excess reserves did not exist, banks could not lend out too much money and trigger an inflationary spiral.

Read the full story:  www.blogs.marketwatch.com

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