A Short Note On The US Economy And The Federal Reserve

By Chandrashekar (Chandra) Tamirisa, (On Twitter) @c_tamirisa

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The US economy is expected to slow down through the first half of 2015.

Led by the steep drop in oil prices, the energy sector is dragging down equipment and inventory investment in the economy as a whole. Corporate earnings are expected to also see a negative turn. Job growth is expected to suffer as a result as can already be seen from the latest jobs report. Consumer spending, reflecting poor wage growth and the lingering uncertainties and weakness in the job market, is expected to be tight and not provide much of a support to growth. The sputtering global economy and the relatively strong dollar are not of help for net exports.

Overall, the US economy will miss growth expectations for 2015. 2015 growth could be more in the vicinity of 2 per cent as it has been for the past several years and inflation could be tame, hovering below the Fed target of 2 per cent.

As a result, the Federal Reserve could put off any interest rate increases until later 2015 or the first part of 2016.


About Chandrashekar (Chandra) Tamirisa

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