The US economy is now heading into recession, if you go by the latest downward revision of the second quarter GDP by the commerce department. The latest data is one more confirmation of the sluggish US economic recovery, and that may complicate things for the US FED in the coming days.
On one hand, the US FED does not any leeway on interest rates which are already near zero, and further pumping of new printed currency notes would only spike up the inflation further. Also there are chances of a steep cut in the governmental spending, as a downward rating on some of the European nations’ sovereign rating could spark fears in the minds of global investors.
US is also running on a huge budget deficit , far higher than most of the European countries, and hence that could warrant some directional action by the US government. Once the November elections are over, we can expect some token action at least from Obama, and that could spell doom for the US in the medium term.
US economy is not recovering…recession in the offing
August - 27 - 2010 - Friday
