Greg Ip

Articles by The Economist’s U.S. Economics Editor

The Fed, the budget and the economy: Policy fatigue

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Policymakers seem helpless in the face of bad economic news

Jun 9th 2011 | WASHINGTON, DC | from the print edition

[Greg Ip] WHEN America’s economic recovery stalled last summer, Washington swung into action. The Federal Reserve announced it would buy $600 billion of government bonds with newly printed money, pushing down long-term interest rates. Then, at the end of the year, Barack Obama struck an agreement with the Republicans to cut payroll taxes and extend unemployment benefits.

Economic history seems to be repeating itself, in part. A promising recovery is again sputtering as job growth, which averaged 220,000 from February through April, slumped to 54,000 in May. The unemployment rate rose to 9.1%, the second monthly increase in a row (see chart). The economy grew at just a 1.8% annual rate in the first quarter and probably only a little faster in the second. Though not a double dip that barely qualifies as a recovery.

The response from Washington, however, is quite different from last year.

The entire article is linked here.

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Written by gregip

June 9, 2011 at 3:43 pm

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