Is U.S. economy really recovering?

Note: This section contains information in English only.
Source: Dukascopy Bank SA
"While monetary-policy discussions naturally begin with a baseline outlook, the path of the economy is uncertain, and effective policy must respond to significant unexpected twists and turns the economy may take"
- Janet Yellen, Fed Chairwoman


Japan and Europe are focusing on the inflation rate, the U.K. made a shift towards the remaining slack, stressing out the productivity and the wage growth. The U.S. economy, however, is a massive and complex system, thus it is difficult to find some indicator that will be pointing to a stronger economy. One of the best source of overall economic data is the Beige Book, which is published by the Fed eight times per year. The central bank divides the whole economy into 12 districts. Each Fed Bank collects information through domestic banks, branch managers and via interview with key business contacts. The latest release of the Beige Book showed that activity in all districts except Cleveland and St. Louis increased. With spring outside, the birds are chirping again and consumers are expected to increase their spending, which accounts for around 70% of the overall economic activity. The economy is likely to continue building up steam, if not only the presence of two problems. The first is the quantitative easing programme and the growing uncertainty surrounding Obamacare. Perhaps, the central bank is concerned about the potential stock collapse in case it ceases the QE.

Nonetheless, since the Great Recession of 2008 the economy has been growing on a steady pace. The only concern was the inflation, but with the recent pick up in consumer prices, the Fed will proceed with tapering, while growth will accelerate, therefore, in a longer-term we can prepare for stronger Dollar.
© Dukascopy Bank SA

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