The budget deficit has improved. Due to higher receipts and restrained outlays the budget deficit narrowed from -$1.4 trillion in 2010 to -$0.88 trillion, which is #$%$ percent of GDP from 9.0 percent in 2010. The better economy along with higher wages and salaries, the expiration of the payroll tax cut, and some tax increases helped raise receipts as outlays barely changed for four years. This is a sign of the improvement in Washington’s finances.
The consumer represents two-thirds of the economy. Consumer confidence is strong according to Rasmussen with the index at the highest level since 2007. IMO this strength is due to the decline in unemployment since there is a strong inverse relationship between consumer confidence and the unemployment rate. Most recently, U.S. banks willingness to lend to consumers has been rising and is highly correlated with consumer spending. The housing recovery is supporting consumer spending through its effect on wealth and housing related purchases. The strength in employment, stocks, and house prices all are positive for consumer spending.
Global short rates hit a record low recently and changes in rates normally lead global growth by about two years. This decline in rates is good for growth in the coming three years. Most recently the Reserve Bank of Australia (RBA) cut rates to a record low 2.75 percent and Draghi said the ECB is ready to cut rates again if necessary. Central banks continue to ease with over 380 stimulative programs globally with word that low interest rates are likely for the foreseeable future. It is unprecedented to have the Fed, Bank of Japan, and ECB all easing simultaneously.
The reason the budget has improved slightly is becasue they have delayed paying certain expenses until later in the year. Its funny how they highlite increased tax revenue from increased hiring and payroll tax cut changes when the majority of the increase is that they have moved when they pay certain expenses. By the way..this housing is great news is all i lie. The average sales of homes in any given normalized year is 800,000 units...we are only on track to do 450,000 sales. Another media based lie.....the recovery that never happened despite 85$ Billion a month inflating of the stock market......
Man !!! you are everywhere singing the same song !! I saw your same post on several message boards - Now here. No disrespect, it looks like you are a messenger from Bernanke or the white house market bulls. I don't think most wise and intellectual people on this Mb would give you any chance to spit your copy paste things. Interesting to see such personality!!
The Fed continues to ease with its purchases of long-term Treasuries of $45 billion a month and mortgage back securities of $40 billion per month. These purchases are working, with the 15-year mortgage rate at a record low of 2.56 percent. This is certainly a positive and helping housing as existing house prices are up 12.0 percent from a year ago. Although some members have expressed concern about the continued easing, we do not expect serious repercussions to the economy at this point. Traditionally, some of the potential risks of loose policies are inflation and asset bubbles. We do not believe these risks are likely to become problematic for now.
The federal spending sequester will likely reduce real GDP growth to 1.4 percent in the second quarter from 2.5 percent in the first quarter. However, fundamentals for the economy remain strong and we expect growth to accelerate in the second half of this year. We expect real GDP growth of 2.0 percent this year, then strengthening to 3.0 percent next year.
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