Slow Growth

By Isaac Cohen*

During the last five years, since the official end of the Great Recession, after a few months of vigorous growth, the US economy falls back into slow growth. This has become perhaps one of the main traits of the present slow economic recovery.

For instance, during last year’s third quarter, US economic growth reached a vigorous 4.1 percent. However, it decreased to 2.4 percent in the last quarter of 2013. Now, on account of the severe winter, some forecasters are reviewing downwards their growth projections for the first quarter of 2014, to less than 1.5 percent. This is consistent with the erratic US economic growth performance

Low inflation is also indicative of a slow recovery. For the last 22 months, inflation has been under the central bank objective of 2 percent. The Commerce Department said the personal consumption expenditures price index, followed closely by the Federal Reserve, was 0.9 percent in February.

These indicators of a slow recovery pose a challenge to the declared intention of the central bank of dismantling stimulus measures, such as asset purchases and very low interest rates. Therefore, the statement issued after the Federal Reserve last meeting explicitly recognized that short term interest rates will remain low, “especially if projected inflation continues to run below” the 2 percent objective.

*International analyst and consultant. Commentator on economic and financial issues for CNN en Español TV and radio. Former Director, UNECLAC.

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