EconomicCrisis.US

Harvard University economics professor Martin Feldstein said the U.S. economy has cooled at the start of this year as consumers cut back on spending amid higher gas prices and a decline in housing wealth.

“There is a mixed picture now in terms of how much the economy is on track,” Feldstein said in an interview on Bloomberg Television’s “InBusiness With Margaret Brennan.” Growth “started slowing down toward the end of the fourth quarter. The January numbers are not very good at all.”

Feldstein cited less-than-forecast consumer spending in January, continuing monthly declines in U.S. housing prices and weakness in industrial production. While fourth-quarter growth was bolstered by consumers spending more after a rise in the stock market, those gains came as the personal savings rate fell, he said.
Read the rest of this entry »

Industrial production in the U.S. increased more than forecast in November and consumer prices slowed, indicating the recovery is gaining momentum without generating inflation.

Output at factories, mines and utilities rose 0.4 percent, the biggest gain since July, after a revised 0.2 percent drop in October, a Federal Reserve report showed today in Washington. The consumer-price index climbed 0.1 percent in November after a 0.2 percent gain the prior month, the Labor Department said.

Assembly lines are speeding up as business investment and exports grow and consumer spending accelerates, helping to buoy an expansion that Fed policy makers said yesterday isn’t strong enough to reduce a jobless rate hovering near 10 percent. Price increases that are below central bankers’ goal will boost the case to maintain the Fed’s purchases of $600 billion in securities through June to spur growth.
Read the rest of this entry »

In other words, President Obama is betting that the tax cuts will spur enough growth to make investors forget about the additional debt required to pay for it. At this fragile point in the U.S. recovery, we believe that Obama is correct in saying that a sudden increase in taxes would be crippling for the U.S. economy. It is not a stretch to predict that the tax cuts will protect the U.S. economy against a deeper slowdown because allowing the tax cuts to expire would basically be akin to reducing stimulus – which America cannot handle at this time.
Read the rest of this entry »

With 2 million jobless workers set to lose unemployment benefits this month, the kind of extension that Congress routinely approved in the past has fallen victim to partisan deadlock — and the consequences could be serious for the U.S. economy.

The benefit payments have helped millions of families make ends meet. But they have also pumped billions of dollars into the financial bloodstream of the nation’s economy as it has struggled to regain its footing after the worst recession in more than half a century.
Read the rest of this entry »