|
At the same time, Bernanke cautioned that the Fed alone can't invigorate the economy. It needs help from Congress. "Monetary policy, as I've said many times, is not a panacea," he said, referring to the Fed's handling of interest rates. "We're looking for policymakers in other areas to do their part." Political bickering in Washington is chilling economic growth. If Democrats and Republicans can't reach a budget deal by year's end, $600 billion in spending cuts and tax hikes will kick in
-- a threat designed to force the two parties to compromise. If they fail, the draconian measures would likely send the economy over a so-called fiscal cliff as the higher taxes and spending cuts took effect. Bernard Baumohl, chief global economist at the Economic Outlook Group, thinks the parties will reach a compromise after the election, avoid the fiscal cliff and give consumers and businesses confidence to spend more. "Once you have greater clarity (about government policy), then I think people will take advantage of the lower interest-rate environment" engineered by the Fed, he says. Baumohl predicts the economy will grow 3.2 percent next year, double what he expects for 2012. The Fed itself is less optimistic: It foresees growth of between 2.5 percent and 3 percent next year after growth of no more than 2 percent this year. David Jones, chief economist at DMJ Advisors, says the Fed's action Thursday reflects its frustration over chronic high unemployment. "The Fed is putting the pedal to the metal and pushing the accelerator down to the floorboard," Jones says. But he says the Fed is reaching a point of diminishing returns after nearly four years of aggressive efforts to help the economy. Its latest actions might trim a mere 0.1 percentage point from the unemployment rate over the next year and boost growth by a modest 0.2 percentage point, Jones says. In the short term anyway, the economy might actually receive a bigger boost from Apple's new iPhone 5. Michael Feroli, chief US economist at JPMorgan, calculated that the iPhone might add 0.25 to 0.5 percentage point to the annual growth rate in the last three months of 2012. "I wouldn't be surprised" if the iPhone does more for the economy, Feroli said in an email. "At the end of the day, economic growth is about producing more and better goods and services."
[Associated
Press;
Copyright 2012 The Associated
Press. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
News | Sports | Business | Rural Review | Teaching & Learning | Home and Family | Tourism | Obituaries
Community |
Perspectives
|
Law & Courts |
Leisure Time
|
Spiritual Life |
Health & Fitness |
Teen Scene
Calendar
|
Letters to the Editor