Think about the US as a trading partner, but also use it in terms of crossover for UK situation; the same situations do not apply across both economies, but there are similarities (Courtesy Soc Gen):
Quote of the day
“I find economics increasingly satisfactory, and I think I am rather good at it.”– John Maynard Keynes
Showing posts with label rates. Show all posts
Showing posts with label rates. Show all posts
Monday, 23 March 2015
US Context for essays on trade & growth
Monday, 2 March 2015
Current state of US economy - The Economist
The American economy
Steady on
THE LAST few weeks have seen a flurry of good data about the America economy. Firms added more than 1m new jobs, in net terms, in the three months to January, the best showing since 1997. At 5.7%, America’s unemployment rate is now one of the lowest in the OECD, a club of mostly rich countries. GDP data, released this morning, shows that the economy expanded at an annual rate of 2.2% in the fourth quarter of 2014—one of the fastest growth rates in the OECD. All this is welcome, of course; but this recovery is still a fragile one.
The pessimists have plenty to point to. For instance, by historical standards the rate of GDP growth is actually not great. In the 1990s it averaged around 4% a year. And it is getting cooler (see first chart). Some industries, like manufacturing, have been touted as economic saviours, but have actually been doing quite badly.
The other big worry is prices. Figures released on February 26th show that America now has deflation. Thanks to a 19% year-on-year fall in energy prices, inflation is now -0.1%. Sustained deflation is bad. America’s bout is likely to be short-lived, say economists at Capital Economics, a consultancy: after all, petrol prices have already rebounded by 30 cents from their trough a month ago. Nonetheless, inflation is way below the Federal Reserve’s target of 2%. Even “core” inflation—a measure that strips out the prices of volatile things—is lingering at 1.6%.
The labour market is looking great. The reduction in unemployment, by recent historical standards, has been pretty good (see second chart). But the jobless rate is still a full percentage point higher than it was just before the recession hit. The number of Americans who have to work part-time for economic reasons has collapsed in the last year—though, again, it is still higher than before the recession (see third chart). The same goes for those that have given up looking for work.
All this choppy data explains why Janet Yellen, the chair of the Federal Reserve, tried to make clear to the markets that interest rates, currently at rock-bottom levels, will not increase any time soon. Doing so is extremely risky. The dollar would get even stronger. That would push down further on inflation, by making imports cheaper, exports less competitive and by influencing expectations. All that turmoil could bring the recovery to a halt. Ms Yellen should enjoy it while it lasts.
Labels:
$,
budget,
budget deficit,
economic growth,
globalisation,
interest rates,
rates
Tuesday, 30 December 2014
Tuesday, 23 December 2014
Negative interest rates, tax changes and more - A2 material
Swiss take interest rates negative - well, not until 22nd January... what happens on 22nd Jan?
Govt mulling tax cut for oil companies - check out the potential job losses
How the poor end up paying the most tax
David Smith on deflation - good or bad thing?
Short article on falling capital inflows - problem for growth in future?
If the links do not open (because The Times doesn't allow it) post this in the comments section, and I will put the articles up individually. There is plenty more to come, and I expect EVERYONE to make the effort to keep up to date.
Govt mulling tax cut for oil companies - check out the potential job losses
How the poor end up paying the most tax
David Smith on deflation - good or bad thing?
Short article on falling capital inflows - problem for growth in future?
If the links do not open (because The Times doesn't allow it) post this in the comments section, and I will put the articles up individually. There is plenty more to come, and I expect EVERYONE to make the effort to keep up to date.
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