Speech (cont.)
Annotation
The S&P 500 index is up almost 8 percent since the start of the year. At the same time, a broad measure of the exchange value of the dollar is down about 4 percent so far this year, which should help boost net exports. After moving up sharply late last year, long-term interest rates have moved down somewhat so far this year. In addition, the balance of risks has shifted over the past two quarters, with a number of downside risks receding and some upside risks emerging. 36 In particular, the latest international economic data have suggested waning downside risks from abroad, while continued labor market strength and the prospect for fiscal stimulus in the United States 37 present a possible upside risk to domestic demand. Importantly, we are seeing synchronized global growth for the first time in many years. Growth forecasts for both advanced and emerging market economies are being marked up, breaking a pattern of repeated downward revisions from 2013 to 2016. Recent political developments significantly enhanced the prospects for policy continuity in the euro area, 38 and there has been continued growth in euro-area employment and economic activity. 39 While Italy continues to face political, economic, and financial risks, recent developments augur well for the resilience of the broader euro area. 40 China’s first-quarter growth came in above 7 percent at an annual rate, although there appears to have been some moderation since then, and capital outflows slowed notably. 41 China’s economy bears watching in the medium term, especially given financial-sector risks and elevated debt levels. Although Mexico’s growth may moderate this year, 42 both the Mexican equity market and the exchange rate have strengthened, along with confidence, following sharp falls late last year. Along with the favorable shift in foreign risks, recent announcements on fiscal policy suggest some upside risk to U.S. aggregate demand. The Administration has proposed
36. We love the idea of an
“upside risk.” Watch out or you might get too rich.
37. Cue the applause from Wall Street.
38. Where is Gov. Brainard getting her political analysis? From the
“Rainbow, Unicorn & Flying Pony News Network”?
39. Anybody want to bet
euros-to-donuts on that?
40. 'Cause Greece, Portugal, and Spain are rolling in dough!
41. Is this the Fed making foreign policy? We think China still has a lot of growing to do.
42. Have the drug cartels run out of bullets?
American Consequences | 41
Made with FlippingBook flipbook maker