us fed sees signs business investment to boost economy
Last Updated : GMT 09:40:38
Themuslimchronicle, themuslimchronicle
Themuslimchronicle, themuslimchronicle
Last Updated : GMT 09:40:38
Themuslimchronicle, themuslimchronicle

US Fed sees signs business investment to boost economy

Themuslimchronicle, themuslimchronicle

Themuslimchronicle, themuslimchronicleUS Fed sees signs business investment to boost economy

The US Federal Reserve looks for a boost to the US economy
Washington - AFP

The Federal Reserve said Friday it sees hopeful signs that business investment is poised to rebound from the doldrums of the global financial crisis and boost the US economy.

But, in its semi-annual report to Congress, the central bank restated its view that the benchmark interest rate should rise only gradually as the economy picks up steam. The Fed has said it expects one more rate increase this year.

The fate of business investment is key because it could unlock gains in the productivity of businesses and workers, which in turn would drive increases in wages that have remained frustratingly sluggish.

Federal Reserve Chair Janet Yellen is scheduled to present the report July 12 in testimony before the House Financial Services Committee, where she likely will again face hostile questioning from Republican lawmakers about the slow growth and tepid wage gains, as well as on how the Fed makes its decisions on interest rates.

After remaining flat for much of 2016, business investment "rose robustly at the beginning of the year," including solid increases in purchases of equipment. Meanwhile, indicators of future spending are "generally upbeat" with orders and shipments moving up, and sentiment indexes have "remained elevated," the report said.

This could bode well for wage gains, which have lagged despite rising employment, the Fed indicated. Average hourly earnings were up 2.5 percent in June year-over-year, the same pace as in May, according to the employment report released earlier Friday.

"These modest rates of compensation gain likely reflect ... weak productivity growth," the Fed said.

And weak productivity growth is partly due to the "sharp pullback" in investment during the recession, and the weak rebound since then.

- Doubts about productivity -

The weak productivity gains is the subject of continuing debate, but the central bank warned that if it remains low it "would greatly restrain the improvement of living standards."

The report also echoes Fed statements that activity slowed in the first quarter largely due to transitory factors, including a lull in consumer spending, notably on energy given the unseasonably warm winter.

First quarter growth slowed to 1.4 percent from 2.1 percent in the final three months of 2016, but the Fed said that more recently "indicators of spending by consumers and businesses have been strong and suggest that growth of economic activity rebounded in the second quarter."

Even with the economy picking up and inflation expected to eventually move up towards the two percent target, from about 1.4 percent currently, the Fed repeated its view that "the ongoing strength in the economy will warrant gradual increases in the federal funds rate."

But central bankers will "carefully monitor" inflation and other economic data in making the decision.

How the Fed decides monetary policy is a topic of ongoing debate in Congress, with some Republican legislators agitating for new rules that would impose a rigid formula for setting monetary policy.

Yellen and other Fed officials have frequently dismissed the idea of using a single rule, saying it is not flexible enough to adjust to changing circumstances in the economy, and the Fed's report has a special section focused on the topic.

It notes that while central bankers use the rules in their models to see how they would react to the current economic conditions, "the US economy is highly complex, and these rules, by their very nature, do not capture that complexity."

source: AFP

themuslimchronicle
themuslimchronicle

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

us fed sees signs business investment to boost economy us fed sees signs business investment to boost economy

 



Themuslimchronicle, themuslimchronicle

GMT 08:26 2018 Tuesday ,23 January

Five things to know about Davos

GMT 09:54 2017 Wednesday ,30 August

North Korea says more missiles to come

GMT 12:15 2017 Tuesday ,21 February

Wozniacki gets back to work with Dubai win

GMT 08:16 2017 Friday ,13 October

New York police probing 2004 Weinstein assault case

GMT 20:45 2017 Wednesday ,25 October

Germany’s Lufthansa says third-quarter profit down

GMT 10:39 2017 Saturday ,23 December

Baidu accuses former exec of stealing

GMT 09:22 2017 Sunday ,19 November

What is the Paris Agreement?

GMT 20:18 2016 Monday ,14 March

UAE Council of Scientists holds first meeting

GMT 06:09 2017 Sunday ,17 December

Porzingis eases injury fears for Knicks

GMT 16:00 2017 Thursday ,07 December

Big fines planned for 'revenge porn' in Australia

GMT 08:45 2017 Sunday ,10 September

What is storm surge and why is it so dangerous?

GMT 06:20 2017 Saturday ,16 December

Strong Wall Street lifts European stock markets

GMT 23:19 2017 Monday ,30 October

KSA set to stage top-level squash

GMT 03:52 2013 Friday ,20 September

The Oslo accords and historical revisionism

GMT 18:16 2011 Tuesday ,04 October

Noor Al-Shareef to play Mubarak

GMT 10:49 2011 Thursday ,29 December

Fernandez prepares for surgery

GMT 07:10 2017 Tuesday ,13 June

Journey to statehood still long for Iraq Kurds

GMT 18:19 2017 Sunday ,05 March

Egyptian Ramadan Sobhi wins man-of-the-match
Themuslimchronicle, themuslimchronicle
Themuslimchronicle, themuslimchronicle
 
 Themuslimchronicle Facebook,themuslimchronicle facebook  Themuslimchronicle Twitter,themuslimchronicle twitter Themuslimchronicle Rss,themuslimchronicle rss  Themuslimchronicle Youtube,themuslimchronicle youtube  Themuslimchronicle Youtube,themuslimchronicle youtube

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2023 ©

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2023 ©

muslimchronicle muslimchronicle muslimchronicle muslimchronicle
themuslimchronicle themuslimchronicle themuslimchronicle
themuslimchronicle
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
themuslimchronicle, themuslimchronicle, themuslimchronicle