EconomicCrisis.US

Federal Reserve Chairman Ben S. Bernanke said the U.S. economy is operating below its level prior to the financial crisis, and that increased household spending is needed to sustain the expansion.

“Consumer spending is not recovered, it’s still quite weak relative to where it was before the crisis,” Bernanke said yesterday in the second of four lectures on the history of the Fed that he plans to deliver at George Washington University. “In terms of debt and consumption and so on we’re still way low relative to the patterns before.”
The Federal Open Market Committee said in a statement after a March 13 meeting that subdued inflation and high unemployment still warrant holding the benchmark interest rate near zero at least through late 2014. Signs the economy is improving don’t dispel risks to growth that include rising gasoline prices, fiscal cutbacks and a weak housing market, New York Fed President William C. Dudley said on March 19.
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Housing starts in the U.S. hovered in February near a three-year high and building permits rose, adding to signs that the industry at the heart of the last financial crisis is stabilizing.

Builders broke ground on 698,000 homes at an annual rate, in line with the median forecast of economists surveyed by Bloomberg News and down 1.1 percent from a January pace that was stronger than previously reported, Commerce Department figures showed today in Washington. Building permits, a proxy for future construction, climbed to the highest level since October 2008.
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New York Fed President William Dudley, a close ally of Chairman Ben Bernanke, painted a mixed picture of the U.S. economy, tempering recent signs the recovery is gaining speed with warnings that it could just as easily stall out.

This fragility is why the U.S. Federal Reserve has not yet decided whether to embark on a third round of quantitative easing, or QE3, though it remains an option, Dudley said on Monday.

“Nothing has been decided,” he said of QE3 [cnbc explains] , in which the Fed would make large-scale asset purchases in an attempt to lower rates and give the economy another controversial shot of adrenaline.
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The student debt crisis isn’t like other debt crises. It won’t sink a currency, like Europe’s sovereign debt crises. And it won’t suddenly topple the U.S. economy, like the mortgage crisis.

But give this crisis enough time, and it might just drag down the middle class.

Last week, the Federal Reserve Bank of New York published a study finding that 27 percent of student borrowers whose loans have gone into repayment are now delinquent on their debt. Then on Saturday, The Washington Post reported that bankruptcy lawyers are seeing a growing number of clients seek relief from their education loans.
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