American economy is not good enough right
now for the increasing of interest rate, which means in the global market,
other countries do not need to worry about cost increasing base on the appreciation
of U.S. dollars. If the global economy become better, American economy will
become better too. At that time, Fed may choose to increase the interest.
4 comments:
This aligns perfectly with my article from another source. America does appear to be the sole bastion of economic soundness and an increase in rates could hurt the rest of the world more than the domestic economy. Hopefully, the global economy will improve so rates could increase if need be and not have a negative global impact.
I'm interested in whether this was a bad couple of months, or if this will signal a change in the American economy. However, I would take it as an encouraging sign that the unemployment rate stayed steady at a reasonable 5.1%. I wonder if the fact that the population in the work force fell to the lowest level since 1977. Does that have to do with more people retiring? Or does it signal something more dire?
In response to Emily's comment above, I feel that this sudden downturn in the American economy is not a new thing, but something that has been expected to occur for years. It is very well known that the "baby boomer" generation is reaching the age of retirement and would soon begin to leave the work force - therefore causing a substantial decrease in the labor force and in turn, the unemployment rate as a whole.
Currently, the American economy is one of the strongest in the world and any change we implement to our economy (for example, increasing interest rates) affects the entire global economy. While I do feel that we need to increase our interest rates to prepare for a possible downturn in the economy, I also feel that we need to wait for the global economy to become stronger. With the lowest unemployment rate in quarters, the United States has some room to wiggle. We need to be careful and raise the interest rates soon, but currently, is it not a dire need.
Increasing rates right now seems to be the wrong move. With that said, the US saving rate is low and increasing the rate would possibly be the answer to this problem. I think it is wrong, however, because the world economy is struggling and increasing our rates would, like you said, appreciate our dollar which the world does not want.
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