As seen in previous posts, and this article, the Fed seems to be be making the right moves, and US economy seems to be growing. Unemployment and inflation rates are stable and very near the Fed's mandated target, signaling stability for those participating in the economic market. This means vacant housing rates have decreased, investment has gone up, jobs are stable, and the financial market is booming.
But how long can last?
The Fed, in order to keep rates constant, and the economy in its "happy place", is aiming to tighten their monetary policy, slowly and gradually in efforts to ensure consistent, if yet slow, growth. The Fed's focus seems to be very under control, however with the ying, comes the yang. Such stability at home breeds excessive risk-takers from investors, households, and even banks. Where international investment has increased with real estate prices, there seems to be record lows on the net income of properties in comparison to prices paid. This loss of money accounted for could be the lit fuse to a large economic shock to threaten the stability of the secure economy we are seeing now.
http://www.cnbc.com/2016/08/31/with-fed-nearing-goals-rate-hikes-could-shield-economy-says-feds-rosengren.html
With all the global instability in addition to the fact that we're now 7 years out from the Great Recession (and recent expansionary periods of business cycles are averaging a duration of 95 months [7.9 years]), It's definitely worrisome to think about the economic landscape in my first year in the labor force in 2017. (Especially, with the relationship between your initial starting salary and total career salary.)
ReplyDeleteThe feds might be reaching their mandate but unforeseeable events can threaten their progress like increase in population which would lead to the increase in labour force. Also, the feds are well aware of the risks that comes with the progress but they are not creating any solutions to battle them. When the economy becomes stable, it would to a greater instability if the feds are proactive because U.S. is a capitalist country where profit is essence that propels it.
ReplyDeleteI agree that there an unforeseeable events that could affect the growth of the economy. The Fed does not seem to be worried about any potential factors that could affect the unemployment and inflation rates. It would be interesting to see what the Fed would choose to do to combat these problems. On the other hand, it is great to see the Fed's target goals almost being met.
ReplyDeleteThe article claims that the US has reached stable growth, which may be a true statement. But this goal of consistent slow growth is not obtainable. It is called a business cycle for a reason, the economy will continue to have its ups and its downs regardless of what the Fed attempts to do.
ReplyDeleteThe article claims that the US has reached stable growth, which may be a true statement. But this goal of consistent slow growth is not obtainable. It is called a business cycle for a reason, the economy will continue to have its ups and its downs regardless of what the Fed attempts to do.
ReplyDelete