U.S. Federal Reserve Board on Wednesday, September 9, issued a "drab book" or an investigation report on the U.S. economic situation, collecting the latest investigative outcome from the U.S. banking system, which consists of 12 federal reserve banks. The report deems that U.S. economy has started to resuscitate but without an adequate impetus.
The relevant data so far released are partly elated and partly worried. Manufacturing industry increases moderately, retail sales turn stable, and the price of housing and particularly the low-end property market fell noticeably… All these represent the exciting news in the report.
Nevertheless, the report notes, the U.S. banking industry is in disorder, both consumers and firms or enterprises are reluctant to borrow money with a bad credit, the criteria for loan application remain the same or incline to intensify, and the property market is also grim.
Serial upward housing and manufacturing data provide more evidence that the worst recession since the early 1930s is losing its grip or has already ended, and U.S. economy has shown signs of recovery in the early third quarter. The home advance sale in the U.S is better than expected in July, the fourth month of house prices rises, and the manufacturing sector in August last year made the first gain in 18 months, as indicated by statistics from the Chinese Ministry of Commerce. The above two gains are seen as a signal for the road to economic recovery.
Almost one-trillion-US-dollar rescue package introduced by the U.S. government is a crucial motive power for riding out the recession, noted public opinions. The U.S. rescue plan in the second quarters of 2009 greatly alleviated the economic slide then and laid the basis for economic recovery in the third quarters.
If without the prompt government fiscal stimulus measures, the U.S. economy could slide one percent, but contract possibly as high as 3.2 percent, according to analyses. Meanwhile, analysts predict the U.S. economy could have a three to four percent growth in the third quarter.
Total U.S, consumer credit fell by a record of 21. 6 billion US dollars in July, the biggest drop in 34 years, or 10 percent at an annual rate to 2.5 trillion dollars, according to a Federal Reserve report. Revolving debt, such as credit cards, fell by 6.1 billion dollars in July. Since consumer spending makes up 70 percent of the U.S. economic activities, a decline in the amount of consumer credit is absolutely no good news at all.
The decrease in consumer spending derives from stark situation on the job market. In spite of some signs of economic recovery, the U.S. is yet to stabilize its job market. The U.S. jobless rate rose to 9.7 percent in August, the highest in 26 years since June 1983 and worse than economists had expected. So, the U.S. employment situation remains grim, acknowledge analysts from 12 U.S. federal reserve banks.
Prestigious economists and White House officials hold that the jobless rate in the United States could reach as high as 10 percent by the end of this year. And the job market in the U.S., however, has already begun to show initial signs to be stable.
In order to cope with the current global financial crisis, the U.S. Federal Reserve would cut the main interest rate by almost as low as zero for the base interest, and the U.S. government has thrown in large quantities of money from various sectors and got heavily into debt as a result.
In face of an economic slowdown and a rising unemployment rate, the too-early retreat from the proactive fiscal policy and lax monetary policy is inconducive for economic recovery in the U.S. If the US government quits too early, it will possibly pose risks for economy and there would be signs of undermining the present stability.
By People’s Daily Online and contributed by PD resident reporter in the U.S. Ma Xiaoning
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