Tuesday, August 31, 2010

Economists divided over US Fed policy

Source: Press TV

The latest survey by National Association for Business Economics reflect a division between economists over ways the US government should stimulate the economy.

In the NABE's semiannual survey in August, 60 percent of economists surveyed believed that the US economy is threatened by deflation in the short run and inflation in the long run.

Concerning fiscal policy, the respondents said the federal government should take action to promote employment growth before reducing the US deficit, Market Watch reported on Monday.

Analysts say the low pace of growth means unemployment will cloud over the US economy well through 2011.

A relative majority of the respondents supported extending individual income-tax cuts, enacted under President George W. Bush, which is scheduled to expire at the end of the year.

Meanwhile, about a third of the respondents were in favor of expiring tax cuts on higher-income individuals and households.

Latest data painted a grim picture for the US economy in the months to come.

Gross Domestic Product (GDP) grew at a smaller-than-expected 1.6 percent rate from April to June. Moreover, unemployment rate remains at almost 10 percent, home sales are plummeting and consumers are spending less.

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