© SOKA University of America
|
The US economy is showing signs of recovery. While jobless rate continues to be high and employment increases less than desired, these are lagging variables and production appears to be on the rise. Of course, there is always the chance that things may stall, but markets are forward looking and seem to be pricing in upside potential.
Do you expect the third round of quantitative easing to happen? Or the need of further monetary stimulus is ruled out in 2012?
The Fed must do a balancing act given the evidence of an improving economy and the potential that the recovery could stall. I do not expect further monetary stimulus given the substantial easing that has already taken place on the part of the Fed and the long lags involved with monetary policy actually impacting the real economy. However, the Fed must manage expectations and, thus, will be in the ready if the economy should seriously stall. Over the next several years I expect the Fed will be managing the reduction of liquidity it has injected into the economy and the increasing interest rates that go along with the recovery.
What is your forecast for the US economy for the end of 2012?
I believe the economy will continue showing signs of recovery, with unemployment in the mid or low 7's percent. Growth will be modest, 2-2.5 percent.
What drivers might boost economic growth of the US?
The multiplier on the upswing will bring the largest boost to the US economy in the recovery. The US economy I believe is the fastest to respond to economic decline by shedding unproductive resources quickly. While businesses will be patient and conservative in increasing employment, once the trend begins it will gather momentum and the US will not face a lost decade like Japan. The housing sector will continue to be a drag on the US economy for some time, but I expect other sectors will begin showing robust growth in the coming year.