- Dick Bove, vice president of equity research at Rafferty Capital Markets
On Monday banking analytic Dick Bove claimed the world's largest economy will fall into recession, as the rate of money flow and inflation will become a massive drag. He expects a 7% rate in the 10-year Treasury will put a severe crimp in the debt-happy economy. However, it can happen not sooner than in four years.
In contrast, the White House expects more robust growth this year rather than was recorded in 2013, while in 2015 growth is likely to pick up. The current projection stands for 3.1% in 2014, compared with 1.7% last year. Moreover, the pace of economic expansion will accelerate to 3.4% next year. Additionally, the unemployment will most likely ease to and average of 6.9% this year. In January the jobless rate turned lower to 6.6%- the lowest in more than five years. Despite these bright forecasts, the recent drop in unemployment was mostly led by the fact many people have stopped looking for job, with the participation rate having fallen to 63% from 66% seen before the start of the recession.
While economy is on the mend and is definitely sending optimistic signs, the administration is concerned that Obamas's low approval rating as well as Democrats' falling popularity can derail economic growth and further improvement in the labour market and economy in general.
© Dukascopy Bank SA