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Martin Feldtein is a professor of economics at Harvard and was chair of the Council of Economic Advisers for President Reagan.
He has posted a pretty sunny outlook over at the Project Syndicate Economist's Club, titled "America's Move to Faster Growth", full article here:
http://www.project-syndicate.org/com...that-lie-ahead
Some highlights
I speculated that GDP growth in the United States would rise in 2014 from the subpar 2% … to about 3%, effectively … output appears to be on track…
The primary driver … is the $10 trillion rise in household wealth…in 2013. ... As .. Ben Bernanke explained when he launched large-scale asset purchases, or quantitative easing, that increase in wealth – and the resulting rise in consumer spending – was the intended result.
... each $100 increase in household wealth leads to a gradual rise in consumer spending … by about $4. That implies that the $10 trillion wealth gain will raise the annual level of consumer spending by some $400 billion, or roughly 2.5% of GDP…
…Real personal consumption expenditures rose at a 3% rate from the fourth quarter of 2013 to the first quarter of this year. …
…a rise in payroll employment of 288,000 in April,..
…2013 was held back by tax increases, government spending cuts mandated by the sequester process, the temporary government shutdown, and the possibility that a binding debt ceiling would require further cuts in government outlays. …the two-year budget agreement enacted by the US Congress means that the economy will not be subject to such negative fiscal shocks in 2014 or 2015.
…The commercial banks…have … excess reserve deposits at the Fed..
...The banks are now content to leave those funds at the Fed, where they earn a mere 0.25% because they are risk-free, completely liquid, and unburdened by capital requirements. …
…The situation now has diverged ..The principle difference .. the Fed will now have to pay the interest on the nearly $2.5 trillion of excess reserves that it holds.
…The US economy is now on a favorable path of expansion….
He has posted a pretty sunny outlook over at the Project Syndicate Economist's Club, titled "America's Move to Faster Growth", full article here:
http://www.project-syndicate.org/com...that-lie-ahead
Some highlights
I speculated that GDP growth in the United States would rise in 2014 from the subpar 2% … to about 3%, effectively … output appears to be on track…
The primary driver … is the $10 trillion rise in household wealth…in 2013. ... As .. Ben Bernanke explained when he launched large-scale asset purchases, or quantitative easing, that increase in wealth – and the resulting rise in consumer spending – was the intended result.
... each $100 increase in household wealth leads to a gradual rise in consumer spending … by about $4. That implies that the $10 trillion wealth gain will raise the annual level of consumer spending by some $400 billion, or roughly 2.5% of GDP…
…Real personal consumption expenditures rose at a 3% rate from the fourth quarter of 2013 to the first quarter of this year. …
…a rise in payroll employment of 288,000 in April,..
…2013 was held back by tax increases, government spending cuts mandated by the sequester process, the temporary government shutdown, and the possibility that a binding debt ceiling would require further cuts in government outlays. …the two-year budget agreement enacted by the US Congress means that the economy will not be subject to such negative fiscal shocks in 2014 or 2015.
…The commercial banks…have … excess reserve deposits at the Fed..
...The banks are now content to leave those funds at the Fed, where they earn a mere 0.25% because they are risk-free, completely liquid, and unburdened by capital requirements. …
…The situation now has diverged ..The principle difference .. the Fed will now have to pay the interest on the nearly $2.5 trillion of excess reserves that it holds.
…The US economy is now on a favorable path of expansion….
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