Tokyo International - Federal Reserve Economic Forecasts
Online, August 22, 2013 (Newswire.com) - Tokyo International researchers are thought to be baffled by the US Federal Reserve's projections that the economy will grow by 2.3-2.6% in 2013.
"We don't really see how we get to those levels when there's evidence of the makings of a swoon in growth, markets are pricing in an exit from Fed QE and, with 80% of the data in for Q2, we're still only tracking at 1.2%," said one "Tokyo International" researcher.
Although the economy is improving slowly, experts say the deep recession and weak recovery may have exacerbated decades-long trends that were already making it tough for Americans to move up the economic ladder and, perhaps, achieve the American Dream.
The incredibly weak job market of the past five years, especially, may mean that more people feel like they are doing everything right - working hard, going to college, following the rules - and still aren't getting ahead.
The firm sees the US economy as having failed to reach what some call "escape velocity" in terms of the speed of its economic recovery. Retail sales disappointed in the month of June adding to concerns of a slowdown in growth rather than the acceleration that is required to get the economy on track to register 2% growth by year end.
According to the researcher, for many people, things have gotten even tougher recently, as Americans have dealt with the housing bust, financial crisis and high unemployment. The nation's median household income in 2011 was nearly 9 percent lower than in 1999, after adjusting for inflation.
The Commerce Department revealed a 0.4% increase in retail sales against expectations of 0.8% among economists polled by Reuters.
Tokyo International believes that the US economy is still precariously balanced and the very real possibility that the Federal Reserve will begin tapering off its asset purchases by the end of the year will only serve to exacerbate the situation.
"If the Fed wants 2% growth this year, it needs to dial back its rhetoric on the ending of quantitative easing," concluded the researcher.