“Bernanke continues to dismiss inflation as a big U.S. economic concern, and the Fed decided last week to keep interest rates between 0.00% and 0.25% “for an extended period.” But U.S. consumers have complained that sky-high gasoline prices are eating away at household budgets and now some retailers are starting to raise prices. The U.S. economic recovery will suffer if consumer spending is cramped by higher consumer costs.
“Consumers are spending more, but it’s getting soaked up in higher gas prices and higher food prices,” John Ryding, chief economist at RDQ Economics, told The New York Times. “That’s not leaving nearly as much left over for discretionary spending.”
The country also continues to struggle with a politically divided Congress that is struggling agree on a federal budget. Hundreds of billions in spending cuts are needed each year to get U.S. government spending to a manageable level, but Congress is gridlocked over how much to cut and where to cut it from.” Read more.
“U.S. Government Spending Is the Biggest Threat to Economic Recovery”
Money Morning, May 11, 2011.
Image by cjansuebsri / FreeDigitalPhotos.net.