The Anemic Recovery from Great Recession Surprise Economists

$DIA, $SPY, $QQQ, $VXX

Friday, the Federal Reserve Chairwoman Janet Yellen said that the slow recovery from the Great Recession has surprised economists, confounding long-held beliefs about growth and inflation.

Speaking to an economic conference at the Federal Reserve Bank of Boston,  Ms. Yellen did not address the Fed’s timetable for rate hikes.

The central bank is widely expected to resume raising rates in December, a reflection of an improved economy, but do not count on it.

Early this year the Fed projected 4 additional hikes, none happened.

Ms. Yellen said sluggish worldwide growth will keep global interest rates low, making it harder for central banks to combat the next recession with rate cuts.

In the aftermath of the Great Recession, Ms. Yellen noted that economists are baffled by the economy’s refusal to comply with their expectations, during the Great Depression of the 1930’s, for example, and the “stagflation” of the 1970’s when high unemployment co-existed with high inflation.

The aftermath of the Y’s 2007-2009 crisis has “revealed limits in economists’ understanding of the economy,” she suggested. Tumbling home prices reduced consumers’ willingness to spend more than economists had envisioned. And a steady decline in the unemployment rate has failed to lift wages and inflation as much as economic models would indicate.

Ms. Yellen said the sluggish recovery suggests that “it is even more important for policymakers to act quickly and aggressively in response to a recession” and that policymakers might need to provide more stimulus “during recoveries than would be called for under the traditional view.”

In December, the Fed raised short short-term U.S. rates from near Zero, where it had kept them for 7 years. Fed policymakers had been widely expected to raise rates 4 times this year, but they have not, citing persistent uncertainty about the economic outlook.

Friday, the US major stock market indexes finished at: DJIA +39.44 at 18138.38, NAS Comp +0.83 at 5214.16, S&P 500 +0.43 at 2132.98

Volume: Trade was below average with 785-M/shares exchanged on the NYSE.

• Russell 2000 +7.2% YTD
• S&P 500 +4.3% YTD
• NAS Comp +4.1% YTD
• DJIA +3.9% YTD

Have a terrific weekend

  alert, analysts, bears, Bulls, depression, DIA, DJIA, Fed, inflation, interest, market, QQQ, rates, Recession, SPY, stocks, VXX

The following two tabs change content below.

• Bio
• Latest Posts

HEFFX Australia

HEFFX has become one of Asia’s leading financial services companies with interests in Publishing, Private Equity, Capital Markets, Mining, Retail, Transport and Agriculture that span every continent of the world. Our clearing partners have unprecedented experience in Equities, Options, Forex and Commodities brokering, banking, physical metals dealing, floor brokering and trading.

Latest posts by HEFFX Australia (see all)

• Tesla (NASDAQ:TSLA) What You Need to Know - September 25, 2020
• What is Next for Amazon (NASDAQ:AMZN)? - September 25, 2020
• The Outlook for Apple (NASDAQ:AAPL) Stock - September 25, 2020