Slower US growth might lead Fed to delay tapering
Source: AP-Excite
By MARTIN CRUTSINGER and CHRISTOPHER S. RUGABER
WASHINGTON (AP) - The U.S. economy may not be strong enough for the Federal Reserve to slow its bond purchases later this year.
That's the takeaway from economists after the government cut its estimate Wednesday of growth in the January-March quarter to a 1.8 percent annual rate, sharply below its previous estimate of a 2.4 percent rate. The main reason: Consumers spent less than previously thought.
Most economists think growth will remain low as consumers and businesses continue to adjust to federal spending cuts and higher taxes. Growth is expected to reach an annual rate of only about 2 percent in the April-June quarter. Even if the economy improves slightly, it would be hard to meet the Fed's forecast of 2.3 percent to 2.6 percent growth for 2013.
Chairman Ben Bernanke rattled investors last week when he said the Fed will likely slow its bond-buying this year if the economy continues to strengthen. The bond purchases have helped keep interest rates low. Bernanke added that if the economy weakens, the Fed won't hesitate to delay its pullback or even step up its bond purchases again.
FULL story at link.
Read more: http://apnews.excite.com/article/20130626/DA75LDR80.html
In this March 1, 2013 file photo, a crane removes a container from a ship at the Port of Baltimore's Seagirt Marine Terminal in Baltimore. The government issues its third and final estimate of economic growth in the January-March quarter, Wednesday, June 26, 2013. (AP Photo/Patrick Semansky, File)
WestStar
(202 posts)$85 billion of nearly "free" money getting pumped into the equity and commodity markets every month.
It isn't helping anyone else though.
DallasNE
(7,404 posts)It does help modestly as does some other trickle down moves. But it is terribly inefficient. $85 billion in infrastructure spending would do about 100 times (not percent) more.
cstanleytech
(26,345 posts)Because if the companies dont pay their workers well then their workers have squat to buy anything so imo they need to force them to give their workers real wage increases without hiking prices by hitting the corporation where it hurts..........in the wallet.
Sock it to them on their profits and on the dividends they give out with higher taxes by looking at the lowest paid workers vs the highest paid employee of the company (usually the ceo) and the bigger the gap the higher the tax rate the company pays.
Also crack down on companies cutting workers hours to 20 - 25 hours a week in order to get around obamacare by making them pay higher corporate taxes on a sliding scale depending on how many part timer they have compared to full timers so the more part timers they hire with that few of hours the higher the tax on the company.
DallasNE
(7,404 posts)Economists are forecasting? The headwinds are too strong. I look for growth to be negative in the 4th quarter because of that. Right now our fiscal policy resembles Europe so why shouldn't our results? Second quarter (just ending) will be around 1.6% and third quarter around .8%. Fourth quarter is actually the first quarter of FY 2014 and we don't yet know what federal spending levels will be and that makes it quite difficult to guess -- plus it is getting pretty far into the future putting it in the plus/minus .2% range.