Monday, January 24, 2011

Experts Citing Rising Hopes for Recovery

Excerpt from Experts Citing Rising Hopes for Recovery
By Sewell Chan, NY Times, Economy

Eighteen months after the recession officially ended, the government’s latest measures to bolster the economy have led many forecasters and policy makers to express new optimism that the recovery will gain substantial momentum in 2011.

Despite persistently high unemployment, consumer confidence is improving. Large corporations are reporting healthy profits, and the Dow Jones industrial average reached a two-year high this week.

The measured optimism is reminiscent of the mood a year ago, when the economy seemed to be reviving, only to stall again in the spring amid widespread fears caused by the debt crisis in Greece and other European countries.

Even so, economists are increasingly upbeat about the outlook, saying that while the economy in 2011 will not be strong enough to drive unemployment down significantly, it should put the United States on its soundest footing since the financial crisis started an economic tailspin three years ago.

The Fed is likely to end its $600 billion bond-buying program in mid-2011, meaning monetary policy might be providing less of a kick to the economy by the end of the year. Officials in the Obama administration also seem to agree that after the $787 billion stimulus last year and the $858 billion tax-cut compromise just approved by Congress, the government’s arsenal of fiscal tools has just about been used up.

Representative Kevin Brady of Texas, the top Republican on the Joint Economic Committee of Congress, said he believed his party’s gains in the midterm elections had bolstered consumer and business confidence, arguing that Republicans have advocated fiscal discipline and opposed onerous regulations and tax increases.

“Consumer confidence seems to be on the upswing and business angst is dropping,” he said. “It hasn’t swung into the confidence column yet, but the negativity is lowering.”

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