Print
Word
PDF|
This section contains 413 words (approx. 2 pages at 300 words per page) |
|
A Revised Economic Perspective,
Summary: Revisions to GDP were not huge measured by magnitude, but they were significant, when judged by their implications for policy. Since the end of the recession in 2001, real economic growth has been a bit slower, implying that productivity and economic growth potential have been weaker than previously thought, while labor costs and the economic risk of higher inflation are greater. One direct consequence of these changes is that the Fed will need a weaker economic growth rate to keep inflation under control. Hopes for an end to the Fed's rate hikes are predicated on weaker growth containing inflation pressures. These revisions suggest that the margin for error is lower and the risks of higher inflation are greater.
Revisions to GDP were not huge measured by magnitude, but they were significant, when judged by their implications for policy. Since the end of the recession in 2001, real economic growth has been a bit slower, implying that productivity and economic growth potential have been weaker than previously thought, while labor costs and the economic risk of higher inflation are greater. One direct consequence of these changes is that the Fed will need a weaker economic growth rate to keep inflation under control. Hopes for an end to the Fed's rate hikes are predicated on weaker growth containing inflation pressures. These revisions suggest that the margin for error is lower and the risks of higher inflation are greater.
From the bottom of the recession in Q3 2001 through Q2 2006, economic growth was revised downwards from 3.3% to 3.1%, a seemingly small, inconsequential change. However, growth of 3.1% was sufficient to reduce the unemployment...
|
This section contains 413 words (approx. 2 pages at 300 words per page) |
|
