News / Economy

Central Bank to Weigh Further Stimulus Measures

Federal Reserve Board Chairman Ben Bernanke on Capitol Hill, Washington, June 7, 2012.
Federal Reserve Board Chairman Ben Bernanke on Capitol Hill, Washington, June 7, 2012.
Ken Bredemeier
Policymakers at the U.S. Federal Reserve, the nation's central bank, may be set to take new action to spur the nation's sluggish economy as they meet on Wednesday and Thursday to decide whether to adopt new policies to rally growth.

The world's largest economic, still struggling to recover from the recession of 2008, the nation's worst since the Great Depression, advanced just 1.7 percent in the April-to-June period compared to the early part of 2012. Job growth has languished, with the Bureau of Labor Statistics reporting last week that relatively few jobs were added in August — only 96,000. More than 12-million people are out of work, and last month 368,000 Americans left the workforce, abandoning their search for new jobs.

According to economics professor Steve Fazzari of Washington University in St. Louis, the economy is having a hard time advancing from the recession.

"We’re still stagnating. We’re not creating enough jobs in the economy to even keep up with population growth. So, yes, we are growing, rather than shrinking ... but we’re not really doing any kind of catch-up here," he said. "We lost so many jobs in 2008 and 2009, and we’re just rumbling along the bottom, as far I’m concerned."

Related Report by Mil Arcega
Expectations High As US Central Bank Officials Meet in Washingtoni
|| 0:00:00
X
Mil Arcega
September 11, 2012 10:24 PM
Expectations are running high that the U.S. Federal Reserve could signal another round of monetary easing, after a disappointing jobs report last week showed U.S. employers hired fewer than 100,000 workers in August. Mil Arcega reports.

The central bank has already bought $3 trillion worth of various types of securities during the last four years to put more money into the economy. Policymakers hoped that, in turn, banks across the country would then make more loans to businesses to hire more workers, and to consumers to spend more on products they need or want.

But the economy is still lagging, and Federal Reserve Chairman Ben Bernanke said last month that the meager job growth is of particular concern, suggesting that the Fed could take new action to boost the economy.

But the type and scope of any central bank action is unknown. The central bank could buy more bonds — perhaps securities backed by home loans — or extend the period for keeping its benchmark interest rate at zero to a quarter of 1 percent beyond the late 2014 date it has already set.

In light of last week's employment report, Fazzari says he expects the central bank to seek to push already low long-term interest rates even lower.

Finance professor Rebel Cole of DePaul University in Chicago says the weak job growth indicates a better than 50-50 chance that the Federal Reserve will adopt new economic policies. But whether the central bank's buying of home-loan securities would boost the labor market, he says, remains uncertain.

“The problem with that is that I don’t think that mortgage rates are too high," he said. "I don’t see how that’s really going to help the job market.”

Moreover, Cole says Americans looking to buy a home face stringent reviews of their personal finances, making home-buying even more difficult.

“Most people who can refinance have refinanced," he said. "The problem in the housing market is not that people can’t afford the mortgage rates, but they can’t qualify for the mortgage because 25 percent are underwater, meaning that the borrower owes more on the mortgage than the home is worth. Underwriting of mortgages has tightened considerably in the last couple years. It’s very, very difficult to qualify for a mortgage unless you have absolutely sterling credit.”

Whether Federal Reserve policymakers decide to adopt new policies — or take no action — is sure to reverberate across the U.S. political landscape, where the state of economy has been the central issue this year's presidential campaigns. President Barack Obama, a Democrat, and his Republican challenger, Mitt Romney, trade barbs almost daily about who can best push the economy ahead at a much faster pace.

You May Like

Multimedia Social Media Documenting, Not Driving, Hong Kong Protests

Unlike Arab Spring uprisings, pro-democracy protestors in Hong Kong aren't relying on Twitter and Facebook to organize, but social media still plays a role More

Analysis: Occupy Central Not Exactly Hong Kong’s Tiananmen

VOA's former Hong Kong, Beijing correspondent compares and contrasts 1989 Tiananmen Square protest with what is now happening in Hong Kong More

Bambari Hospital a Lone Place of Help in Violence-Plagued CAR

Only establishment still functioning in CAR's second city is main hospital More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
The Legacy of Jimmy Carter: The Preacher from Plainsi
X
October 01, 2014 10:45 AM
It is common in the United States to see tourists flock to sites associated with America's presidents. Some are privately owned and others are run by the National Park Service or the National Archives -- but most have helped draw business and people into the towns and cities where they are located. As VOA’s Kane Farabaugh reports, there is one particular presidential hometown that is unique in what it has to offer those who make the trip.
Video

Video The Legacy of Jimmy Carter: The Preacher from Plains

It is common in the United States to see tourists flock to sites associated with America's presidents. Some are privately owned and others are run by the National Park Service or the National Archives -- but most have helped draw business and people into the towns and cities where they are located. As VOA’s Kane Farabaugh reports, there is one particular presidential hometown that is unique in what it has to offer those who make the trip.
Video

Video Hong Kong Protests Draw New Supporters on National Holiday

On the 65th anniversary of the founding of Communist China, Hong Kong protesters are hoping to stage the largest pro-democracy demonstration since the 1989 Tiananmen protests. VOA's Brian Padden visited one of the protest sites mid-day, when the atmosphere was calm and where the supporters were enthusiastic about joining what they are calling the umbrella revolution.
Video

Video India's PM Continues First US Visit

India's prime minister is on his first visit to Washington, to strengthen political and economic ties between the world's oldest and the world biggest democracies. He came to the U.S. capital from New York, the first stop on his five-day visit to the country that denied him an entry visa in the past. From Washington, Zlatica Hoke reports Modi seemed most focused on attracting foreign investment and trade to increase job opportunities for his people.
Video

Video Malaysia Struggles to Stop People Joining Jihad

Malaysian authorities say militant groups like the so-called "Islamic State" have used social media to entice at least three dozen Malaysian Muslims to fight in what they call "jihad" in Syria and Iraq. As Mahi Ramkrishnan reports from Kuala Lumpur, counterterrorism police are deeply worried about what could happen when these militants return home.
Video

Video Could US Have Done More to Stop Rise of Islamic State?

President Obama says airstrikes against Islamic State militants in Syria will likely continue for some time because, in his words, "there is a cancer that has grown for too long." So what if President Obama had acted sooner in Syria to arm more-moderate opponents of both the Islamic State and the Syrian government? VOA State Department Correspondent Scott Stearns reports from the United Nations.
Video

Video Treasure Hunters Seek 'Hidden Treasure' in Central Kenya

Could a cave in a small village in central Kenya be the site of buried treasure? A rumor of riches, left behind by colonialists, has some residents dreaming of wealth, while others see it as a dangerous hoax. VOA's Gabe Joselow has the story.
Video

Video Ebola Patients Find No Treatment at Sierra Leone Holding Center

At a holding facility in Makeni, central Sierra Leone, dozens of sick people sit on the floor in an empty university building. They wait in filthy conditions. It's a 16-hour drive by ambulance to Kailahun Ebola treatment center. Adam Bailes was there and reports on what he says are some of the worst situations he has seen since the beginning of this Ebola outbreak. And he says it appears case numbers may already be far worse than authorities acknowledge.
Video

Video Identifying Bodies Found in Texas Border Region

Thousands of immigrants have died after crossing the border from Mexico into remote areas of the southwestern United States in recent years. Local officials in south Texas alone have found hundreds of unidentified bodies and buried them in mass graves in local cemeteries. Now an anthropologist and her students at Baylor University have been exhuming bodies and looking for clues to identify them. VOA’s Greg Flakus has more from Waco, Texas.
Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.

AppleAndroid

World Currencies

EUR
USD
0.7866
JPY
USD
109.25
GBP
USD
0.6139
CAD
USD
1.1120
INR
USD
61.428

Rates may not be current.