Needless to say, uncertainties abound, which makes Mr. Bernanke’s fine tuning difficult, if not impossible. Possibly offsetting the economic uptrend in the U.S. are measures by the Chinese to damp speculation and head off inflation in that country. Many expect a rise in interest rates by the end of the year by the people’s Bank of China, on the heels of a tightening of reserve requirements announced today. China has been, however, and continues to be, extremely cautious about crimping the growth so necessary to absorbing the country’s work force.
The U.S. economy faces other serious challenges from within our own borders. Huge fiscal problems in California, New York and several other key states will prove a drag as governors cut spending to balance budgets. And, we are also not out of the woods on housing. However, the weaker dollar and the estimated trillion-dollar cash reserves of our corporations suggest growth could surprise on the upside. If that proves to be the case, let’s hope the Federal Reserve is quicker to react to rising prices than they were in spotting the mortgage bubble. A lot quicker.
Click here to visit the Business Buzz home page.