Data released last Thursday showed that the US economy grew by 3.5% in the third quarter, the fastest growth rate in a year, marking the end of the US recession. The data stimulated a sharp rebound in US and global stock markets.
When investors rejoiced in the stabilization of the US economy, comments from US government officials and authoritative economists showed that the road to recovery is still long.
Government officials
The economy is stabilizing but the credit crunch risk remains
US Treasury Secretary Timothy Geithner said on Thursday that the third quarter economic growth data of the United States is very encouraging. The data suggests that the economy is in the early stages of recovery and growth is comprehensive and strong.
The US National Economic Council director Summers also said on Thursday that "the US economy has begun to improve after a severe recession."
But it is worth noting that both Geithner and Summers said that the risk of a credit crunch still exists, and the road to economic recovery is still long, and the government must consolidate economic growth.
Geithner specifically pointed out that in order to avoid a credit crunch, the financial system must continue to receive sufficient funds to fulfill its responsibility to lend to businesses and consumers.
In this regard, analysts said that this shows that although the US monetary base has exploded, but bank lending has not increased correspondingly, the United States may have encountered the Japanese-style liquidity trap.
economist
The Fed will not raise interest rates next year
The recession may be over, but what about the recovery?
Bruce Kasman, chief economist at JPMorgan Chase, believes that for most of next year, the US economy will grow at a rate of about 3.5%. In contrast, Goldman Sachs chief economist Jane Hazus is not so optimistic. Hazus expects the US gross domestic product (GDP) growth rate to be about 2% at the beginning of next year and will drop to only 1.5% by the end of the year.
Even in the more optimistic forecast of Kasman, the possibility of a strong recovery is rather weak, and the unemployment rate will remain high until the end of the year, and it will remain at 9%. Kasman said that this is because the US economy needs to grow at a rate of 5 to 6% for several years to reduce the unemployment rate to around 5%, which is the level of prosperity during the early part of this century.
Hazus predicted that the US economy will be even more difficult, and the unemployment rate will rise to 10.5% by the end of next year. Hazus said that this directly indicates that GDP growth is not strong enough to reduce the unemployment rate, especially in the case of weakening government stimulus measures.
Both economists predict that the Fed will notice economic growth, but will still be concerned about the very high unemployment rate and the core inflation rate that may fall below 1% next year. In this case, the Fed’s job is to push up the inflation level, so the Fed will not raise interest rates next year.
When investors rejoiced in the stabilization of the US economy, comments from US government officials and authoritative economists showed that the road to recovery is still long.
Government officials
The economy is stabilizing but the credit crunch risk remains
US Treasury Secretary Timothy Geithner said on Thursday that the third quarter economic growth data of the United States is very encouraging. The data suggests that the economy is in the early stages of recovery and growth is comprehensive and strong.
The US National Economic Council director Summers also said on Thursday that "the US economy has begun to improve after a severe recession."
But it is worth noting that both Geithner and Summers said that the risk of a credit crunch still exists, and the road to economic recovery is still long, and the government must consolidate economic growth.
Geithner specifically pointed out that in order to avoid a credit crunch, the financial system must continue to receive sufficient funds to fulfill its responsibility to lend to businesses and consumers.
In this regard, analysts said that this shows that although the US monetary base has exploded, but bank lending has not increased correspondingly, the United States may have encountered the Japanese-style liquidity trap.
economist
The Fed will not raise interest rates next year
The recession may be over, but what about the recovery?
Bruce Kasman, chief economist at JPMorgan Chase, believes that for most of next year, the US economy will grow at a rate of about 3.5%. In contrast, Goldman Sachs chief economist Jane Hazus is not so optimistic. Hazus expects the US gross domestic product (GDP) growth rate to be about 2% at the beginning of next year and will drop to only 1.5% by the end of the year.
Even in the more optimistic forecast of Kasman, the possibility of a strong recovery is rather weak, and the unemployment rate will remain high until the end of the year, and it will remain at 9%. Kasman said that this is because the US economy needs to grow at a rate of 5 to 6% for several years to reduce the unemployment rate to around 5%, which is the level of prosperity during the early part of this century.
Hazus predicted that the US economy will be even more difficult, and the unemployment rate will rise to 10.5% by the end of next year. Hazus said that this directly indicates that GDP growth is not strong enough to reduce the unemployment rate, especially in the case of weakening government stimulus measures.
Both economists predict that the Fed will notice economic growth, but will still be concerned about the very high unemployment rate and the core inflation rate that may fall below 1% next year. In this case, the Fed’s job is to push up the inflation level, so the Fed will not raise interest rates next year.
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