US Economy Showing Signs Of Over-Heating (James Bullard)

[Economy 52,844]

http://www.bloomberg.com/video/fed-s-james-bullard-speaks-about-economy-monetary-policy-3OTMEpoFTeuaXMapENn~QQ.html/

 

James Bullard is one of the economists that works at the US Central Bank (Federal Reserve) and in his opinion the economy is now too strong for interest rates at 0% as the economy adds over 200,000 jobs a month, GDP shows robust growth and investors seem confident and leaving rates as they are could lead to over-heating as were already beginning to see in the stock market.

 

For those of you who dont know, over-heating is when the economy begins to grow unsustainably or in an imbalanced way because it is growing too quickly for its capacity...

 

If consumer demand rises faster than companies can expand production resulting in high inflation, if investors become over-confident and invest too much in stock markets and blow bubbles, if there is excessive credit being lent out, or if a surge or economic boom is leading to bubbles those are all examples of an economy that is over-heating

 

2014 is set to have the biggest job gains since 1999, and with consumer and investor confidence quickly rising...  James Bullard believes it is time to start raising rates to prevent future over-heating and financial instability and slow the economy to a sustainable growth rates

[xoxo cupcakke 4,781]

Something definitely needs to be done. If not, there will be like a second recession since 2008. I'm just glad the US is getting out of its hump but it should do it gradually and not so quickly or else it will bust its back. 

[Economy 52,844]

Something definitely needs to be done. If not, there will be like a second recession since 2008. I'm just glad the US is getting out of its hump but it should do it gradually and not so quickly or else it will bust its back. 

unsustainable booms always lead to busts.

 

the economy over-heated between 2004-2006 and look what it caused. theres no need for wild swings from extreme highs to extreme lows

 

so far only the stock market appears to be over-heating. the rest of the sectors are not showing that yet so the economy is not that imbalanced as of now

 

but eventually the economy will over-heat if rates stay at 0% as they have for the past 6-7 years now...

 

rates at 0% are not dangerous when the economy is really weak because if ppl arent borrowing, banks not lending, and there is a lot of caution because of uncertainty... low rates dont cause issues under that environment

 

but once the economy begins to heat up, if rates arent risen, businesses and people begin to do stupid things when rates are low