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US Economy: Struggling With Slow Recovery

2010/8/16 9:58:00 41

American Economy

A half year ago

monetary policy

At the congressional hearing, Federal Reserve Chairman Bernanke told lawmakers that the US economy is "indifferent to uncertainty" and believes that the US economy is fragile.

He was pessimistic about the economic situation.


In August 10th, the Federal Reserve announced that the federal funds rate would remain at the lowest level of 0~0.25%, and it would maintain the scale of its existing balance sheet holdings by buying more treasury bonds instead of gradually reducing its planned balance to normal levels.

The move is seen as a harbinger of a new round of monetary expansion by the Federal Reserve, behind which the Fed is more pessimistic about the economic situation.


At the beginning of this year, the US economic recovery seems to have risen, so that people can see the dawn of going out of the gloom.

However, half a year has passed, but the pace of economic recovery has hardly moved forward.


"First Financial Daily" reporter noted that in recent months, various types of the United States

Retailer

The frequency and scope of discount increased significantly.

Clothing retailer Banana Republican launched a $10 coupon every Tuesday and a forty percent off activity per Wednesday.

And many daily necessities stores offer more than 40% discount coupons a week, and provide hundreds of dollars of free goods every month to attract customers to patronize.


At Staples, a large office supplies store in the United States, the clerk told the newspaper that they accepted the Office Depot discount coupon, which was not expressly provided, but each store received similar notice.

The same situation also occurs in some baby products stores such as Babiesrus, Buybuy Baby and so on.


Even though businesses cut prices so much to attract consumers, according to the US Department of Commerce, retail sales in the United States continued to decline for the two month in a row, and sales in June dropped by 0.5 percentage points over May.

The US Real Estate Association's data also show that the US sales of existing homes dropped 5.1 percentage points in June, bringing home sales to 5 million 370 thousand units in the year.

The average selling price of housing in June was only 183 thousand and 700 dollars.


The main reason behind these figures is high.

unemployment rate

According to the labor department report, the unemployment rate in many states in the United States decreased in June this year, not because many people found jobs, but more people had given up looking for jobs, so they were not counted as unemployed.

The unemployment rate in New York dropped from 8.3 percentage points to 8.2 percentage points, but the number of private sector jobs in the state decreased by 8500.


"The current labor market is the worst since the great depression."

Bernanke said the process of reducing the national unemployment rate is slower than expected.

According to the Fed's forecast, the unemployment rate will remain at a high level this year, or around 9%.

It takes a lot of time to restore the 8 million 500 thousand jobs lost in 2008 and 2009.


"In recent months, the power of economic recovery has been reduced."

Mickey Levy, chief economist at the Bank of America, told the newspaper, "we see the extreme caution of families, consumers and businesses in the United States because there are so many uncertainties in the US economy". (Mitch Levi)


Although Bernanke believes that the US economy is full of uncertainties, he still believes that the US economy is unlikely to enter a "double bottom recession".

Many economists agree with Bernanke.


"I expect that in the next year, we will increase our intensity in the low economic growth rate, and then the economy will rise at an acceptable speed.

Unfortunately, this will lead to little improvement in the unemployment situation. "

Douglas Elliot of Brookings Institution (Douglas Elliott) told this newspaper.

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