Last week, Federal Reserve Chairman Ben Bernanke gave his Semiannual Monetary Policy Report to Congress. In it, he explained how high Federal deficits will causes interest rates to spike beyond the Fed’s control: In order to keep the ratio of outstanding government debt to GDP constant, we need to have deficits from 2.5%-3%. (The current projection of) 4-7% is not sustainable, and if that were... (more...)

At first glance, the economic growth report for fourth quarter 2009 improved – it was up 5.9% instead of the 5.7% growth rate reported last month. However, and just like last month, this growth was based on businesses stocking up low inventory, which added 4 points. Read more… Looking Back – Fourth Quarter Didn’t Do So Well originally appeared on About.com US Economy on Monday,... (more...)

The most important leading economic indicator, manufacturers’ orders for Durable Goods, is (finally!) up – a surprising 10% from last year. After 22 loooong months, January business orders for things like computers, autos and machinery was higher when comparedyear-over-year. This means business confidence is picking up. Read more… “We’re Out of the Woods!” says... (more...)

The Center for Economic and Policy Research recently released “The Budget Deficit Scare Story and the Great Recession” in which it states that concerns about the $1.3 trillion deficit are just “a well-funded public relations campaign (that) has managed to largely push the economic crisis to the back burner.” The Center argues that the surge in the deficit in the last two years... (more...)

A reader asks: How does the Federal Reserve’s plan to reduce banks’ reserve balances affect the global demand for and price of oil, copper, grains, sugar…all of which are limited, in-demand commodities. Global population increases and expansion of the economies of China and India (both with populations of a billion plus) will drive demand and cause inflation. If the Fed raised interest... (more...)

President Barack Obama is determined to lower the costs and create new jobs in health care. Today, Obama launched a new health care reform plan that is mainly modeled after the Senate Health Care Reform Bill. It keeps a state-regulated insurance exchange, and restrictions on federal funding for abortion, but cuts back taxes on the high end health plans. It increases the Medicare payroll tax on upper-income... (more...)

In January 2010, the Consumer Price Index (CPI) was up .2% since last month. Gas prices rose 4.4%%, while the winter heating season drove oil prices up 6.1%. For more, see Current Inflation Rates. Your Opinion: Which Is the Bigger Concern – Inflation or Recession? Read more… Grocery Prices Keep Dropping originally appeared on About.com US Economy on Friday, February 19th, 2010 at 13:19:31. Permalink... (more...)

Japan has replaced China as the largest holder of U.S. Treasuries. The $12 trillion U.S. debt has worried China enough to begin selling off its holdings. As of December 2009, China held $755 billion, which is still 20% of U.S. debt to foreign countries. Read more… China No Longer America’s Biggest Banker originally appeared on About.com US Economy on Tuesday, February 16th, 2010 at... (more...)

People are not letting the recession stop them from sharing the love on Valentine’s Day. This year, Valentine’s Day will contribute around $14 billion to the economy, according to the National Retail Federation. Instead of spending less, people are looking to get more for their dollar by heading to discount stores (40%) instead of department stores (30%) or florists and other specialty... (more...)

Will the Federal Reserve raise the Fed Funds rate in 2010 to prevent inflation? Probably not, since Federal Reserve Chairman Ben Bernanke has already started winding down many of the programs that steered the worlds’ largest economy away from collapse. On February 10, he outlined a plan that uses other tools to absorb money the Fed has pumped into banks since August 2007. Read more… Will... (more...)