Maybe in December
By Isaac Cohen*
One day after the central bank left interest rates unchanged, the Department of Commerce revealed US annual rate of economic growth, between July and September, was only 1.5 percent, much less than the 3.4 percent growth rate of the previous quarter, from April to June. This confirms that the US economic recovery is still weak, validating the decision to wait until December to start lifting interest rates, adopted last week by the central bank.
The last quarter slowdown was caused mainly by less investment, particularly in the energy sector and by a drawdown in inventories, which cut 1.44 percent from the rate of growth. In the third quarter, consumer demand increased 3.2 percent, stimulated by low gasoline prices and evidenced in increased automobile sales. However, the disappointing creation of only 142,000 new jobs in September contrasted with the monthly average of 260,000 jobs in 2014 and confirmed the third quarter slowdown.
The press release issued last week, by the Federal Reserve Open Market Committee, said the next meeting of December 15-16 will assess “whether it will be appropriate” to raise the federal funds rate. For this purpose, besides monitoring several domestic indicators, such as labor market conditions, inflation pressures and expectations, the Committee will also follow the evolution of global economic and financial developments.
*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio. Former Director, UNECLAC.