Economy 52,879 Posted October 21, 2014 Share Posted October 21, 2014 http://bizbeatblog.dallasnews.com/2014/10/dallas-fed-officials-see-risk-in-falling-us-unemployment-rate.html/ http://www.cbsnews.com/news/how-will-a-strengthening-dollar-affect-the-us-economy/ Its finally happening!!! Job growth growth remains consistant, GDP growth has accelerated, unemployment is falling, construction is rising, and banks are lending againIf the economy keeps accelerating the US Central Bank will HAVE to start raising interest rates because a stronger economy with rates at 0% will eventually lead to high inflation, asset and debt bubbles, economic over-heating, and other imbalances that could cause instability At the same time the dollar has already been rallying. If rates go up the Dollar will rise even more. A high dollar combined with a weak global economy is a recipe for disaster when it comes to manufacturing and exports and the US recovery could continue purely on consumption like it did in 2002 to 2006 and that isnt sustainable and could eventualy lead to another nasty crash The slowing of Europe and Asia resulting in a high dollar and weak demand while the US recovers faster puts the US Central Bank in a difficult position! Link to post Share on other sites More sharing options...
Altair 2,003 Posted October 21, 2014 Share Posted October 21, 2014 So should I take my money out of the bank? Link to post Share on other sites More sharing options...
CaliLilMonster 476 Posted October 21, 2014 Share Posted October 21, 2014 The rest of the world better get their act together. I'm not here for another recession/depression. Why is the US doing so well compared to European and Asian economies? P.S. Sword Link to post Share on other sites More sharing options...
Economy 52,879 Posted October 21, 2014 Author Share Posted October 21, 2014 So should I take my money out of the bank? lol no. this basically just means if the US economy keeps recovering at the pace its been and the Central Bank doesnt raise rates within the next 6-9 months... inflation might get higher than it should be and it could cause financial instability by blowing up asset bubbles and cause over-heating in real-estate and other economic sectors somehow tied to the financial system Interest rates just arent meant to stay at 0% when the economy is recovering But if they do raise rates, the currency will rise even more and thats bad for exports and manufacturing, especially with weak demand in Europe and Asia to top it off... it will only be good for the consumption part of the economy and too much consumption without enough production from 2002 to 2006 is part of what brought the US down to its knees in the 2008 collapse In Canada we had a simmilar dillema. We didnt collapse as bad as other Nations so our currency shot up and we couldnt try to weaken it because the economy was too strong to have rates as low as other nations... a high Canadian Dollar in combination with world recession totally killed our manufacturing which shrank a wooping 20% from 2008 to 2009 alone! The US is in a simmilar situation, although not as severe as Canada because the US dollar didnt shoot up as much as the Canadian dollar did in 2008-2009 nor is world demand as bad as in 2008 & 2009 Link to post Share on other sites More sharing options...
Economy 52,879 Posted October 21, 2014 Author Share Posted October 21, 2014 The rest of the world better get their act together. I'm not here for another recession/depression. Why is the US doing so well compared to European and Asian economies? P.S. Sword Well the US had mostly imbalances such as over-production of homes during boom years, too much production of cars, over-spending by consumers etc those are imbalances that corrected themselves overtime when the economy was weak cause for a while construction, car production and consumer spending was depressed. Consumers in the US are no longer drowning in credit card debt and theres no over-supply of automobiles or housing anymore Europes Problems are more policy. They have policies bad for business... Also their financial situation in some Countries are really bad. these are issues that wont fix themselves, the Government has to manage them. Most US problems on the otherhand were economic imbalances created during the boom years of 2002 to 2006 which the economy resolved by itself through natural cycles. People dont realize this but most recessions are like a painful medicine that cure underlying problems As for China, weak demand WW is slowing them... and their economy is maturing and they are focusing more on domestic consumption as wages rise in China but transitioning to a more mature economy more reliant on consumption is a slow and painful process... and that affects all of Asia Link to post Share on other sites More sharing options...
Woolfsmck 2,763 Posted October 21, 2014 Share Posted October 21, 2014 I wanted to buy a sword at the store today... But the salesman didn't know what it was. 8-) like a cat in a sil, I observe life, moving and still. My words give a clue,look inside to see whats true Link to post Share on other sites More sharing options...
Miker 5,683 Posted October 21, 2014 Share Posted October 21, 2014 China has a huge impact on the world market and since it is slowing down I think the prosperous numbers we have seen for the U.S. markets will begin to slide downward. The job numbers are better but sometimes they are misleading because the jobs can be part-time or lower paying jobs. I don't think there will be any hurry to raise interest rates although you can't rule out something minor might happen. Mars..........or bust! Link to post Share on other sites More sharing options...
Economy 52,879 Posted October 21, 2014 Author Share Posted October 21, 2014 China has a huge impact on the world market and since it is slowing down I think the prosperous numbers we have seen for the U.S. markets will begin to slide downward. The job numbers are better but sometimes they are misleading because the jobs can be part-time or lower paying jobs. I don't think there will be any hurry to raise interest rates although you can't rule out something minor might happen. there has been more higher paying and full time jobs the past year than the other 4 years of the recovery tho When unemployment drops, consumer confidence rises, and u have rates as low as they can go, people will spend! And because US corporations and businesses have deleveraged their debt levels are are sitting on record amounts of cash, now that uncertainty has surpassed, they will make investments to expand to meet the demands of more active consumers The domestic part of the US economy should continue to accelerate. Its exports and manufacturing thats more in danger... But u need that component of the econoy to sustainably sustain the rising consumption and thats at risk now The US saw good growth in exports and manufacturing due to competitive energy costs from lower oil prices thanks to oil export ban and shale oil revolution, as well as a weaker dollar Now the dollar is strengthening, the energy costs gap has reduced as oil world wide has dropped, and demand has dropped the last few months as Europe started stagnating again So the recent momentum of manufacturing and exports for the US will likely loose steam :MANiCURE: Link to post Share on other sites More sharing options...
Woolfsmck 2,763 Posted October 21, 2014 Share Posted October 21, 2014 I wanted to buy a sword at the store today... But the salesman didn't know what it was. 8-)allright.... Who fixeded my spelling errors???? Hmmmmmmm like a cat in a sil, I observe life, moving and still. My words give a clue,look inside to see whats true Link to post Share on other sites More sharing options...
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