Economics

التعافي الأميركي المحفوف بالمخاطر

Apr 28, 2015 Martin Feldstein

كمبريدج ــ إن اقتصاد الولايات المتحدة يقترب من تحقيق هدف التشغيل الكامل للعمالة، وربما وصل إلى هناك بالفعل. ولكن اتجاه تشغيل العمالة الواعد في أميركا يأتي مصحوباً بزيادة كبيرة في مخاطر القطاع المالي، نظراً للسياسة النقدية المفرطة التيسير التي استخدمت لتحقيق التعافي الاقتصادي الحالي.

فقد انخفض معدل البطالة الإجمالي إلى 5.5% فقط، ولا يتجاوز معدل البطالة بين خريجي الجامعات الآن 2.5%. أما الزيادة في التضخم والتي تحدث عادة عندما يبلغ الاقتصاد مستويات تشغيل العمالة هذه فقد تأجلت مؤقتاً بفِعل انخفاض سعر النفط وارتفاع قيمة الدولار بنسبة 20%. والدولار الأقوى لا يعمل على خفض تكاليف الواردات فحسب بل ويفرض أيضاً ضغوطاً تدفع أسعار المنتجات المحلية التي تنافس الواردات إلى الانخفاض. ومن المرجح أن يبدأ التضخم في الارتفاع في العام المقبل.

وتعكس العودة إلى العمالة الكاملة استراتيجية بنك الاحتياطي الفيدرالي الأميركي المتمثلة في "السياسة النقدية غير التقليدية" ــ مزيج من عمليات الشراء الضخمة من الأصول الطويلة الأجل والمعروف باسم التيسير الكمي ووعده بالإبقاء على أسعار الفائدة القصيرة الأجل قريبة من الصِفر. وكان انخفاض مستوى كل أسعار الفائدة نتيجة لهذه السياسة سبباً في دفع المستثمرين إلى شراء الأسهم وزيادة أسعار المساكن المشغولة بمالكيها. ونتيجة لهذا، ارتفعت القيمة الصافية للأسر الأميركية بنحو 10 تريليون دولار في عام 2013، الأمر الذي أدى إلى زيادات في الإنفاق الاستهلاكي والاستثمار في الأعمال التجارية.

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Martin Feldstein

Writing for PS since 2008
130 Commentaries

Martin Feldstein was Professor of Economics at Harvard University and President Emeritus of the National Bureau of Economic Research. He chaired President Ronald Reagan’s Council of Economic Advisers from 1982 to 1984. In 2006, he was appointed to President Bush's Foreign Intelligence Advisory Board, and, in 2009, was appointed to President Obama's Economic Recovery Advisory Board. He was also on the board of directors of the Council on Foreign Relations, the Trilateral Commission, and the Group of 30, a non-profit, international body that seeks greater understanding of global economic issues.

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0 Comments on this paragraph, 18 Comments on this article

paul murphy May 12, 2015

Poor money managers. How much will we have to pay them not to do anthing st... scratch that. Anything to line their own...forget I said anything.
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B Wilds May 7, 2015

Rates should reflect a return on investment after adjusting for both risk and inflation, currently they do not.
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B Wilds May 7, 2015

This article starts from the premise that we are indeed at or approaching full employment. While I agree with Mr. Feldstein on the need to raise rates and the risk we face I feel cultural change is sweeping across America and it appears less people really want to work. You can blame it on a lack of compelling opportunities or a variety of different reasons, but this may be a signal the chickens are coming home to roost and the cost could be massive.

As people leave the work force even for a short time many of them find it hard to get excited about the idea of reentering. The arena known as the work place is to many workers a time consuming and unpleasant mix of unfulfilling task. The article below delves into the ramifications of a Shrinking Labor Pool that represents a dramatic shift in the values of the American people and the implications for society at large.

http://brucewilds.blogspot.com/2015/03/shrinking-labor-pool-is-cause-for.html
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Per Kurowski May 3, 2015

Current bank regulations, more-credit-risk-more-equity and less-credit-risk-less-equity, provide banks with higher risk-adjusted returns on equity for what is perceived as safe than for what is perceived as risky.

And that generates risky excessive exposures to what is “safe” and way too little exposures to what is perceived as risky, like lending to SMEs.

The biggest problem with the current easier monetary policy is that because of these regulations, money is not allocated efficiently.

http://bit.ly/1K24cEA
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kiers sohn May 1, 2015

There needs to be a change in the language: rates aren't being "kept" low, they are low b/c they FULLY reflect market conditions. The magical term "productivity growth" was a one-sided accounting fraud: it wasn't the result of workers becomings smarter or working harder (but that's the way media liked to hype it, stirring patriotic(!?) fervor). It was the result of buyers buying more of what the workers produced.

There are A LOT OF FLAWS in ivory tower economics.
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Brent Beach Apr 30, 2015

The FED has been kicking the can down the road for 15 years or more, keeping bad investments alive and allowing more bad investment for that entire period.
Measuring employment by looking at unemployment alone is wrong, Employment is still 5% below pre-crash levels. Labour cost push inflation is not a problem. Goods cost push also unlikely given the number of countries producing all the goods US buys.
Perhaps instead of writing kicking the can down the road I should have written pushing the snowball down the hill. The longer the US delays a return to rational monetary policy the worse the reaction is going to be.
The article lists many of the distortions current monetary policy has caused. The volume of long term bonds out there at interest rates below 3% will overhang the economy until all those bonds mature. The holders of those bonds are the victims of this Fed policy. Unfortunately they don't understand the problem they are in. The only way for them to get out is through the government buying their bonds from them at par, regardless of current interest rates.
The folly of the last two FED chairs - Greenspan and Brenanke - will cause untold misery for decades.
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G. A. Pakela Apr 30, 2015

Raising interest rates and setting them at an inflation adjusted 2% are two different things. The latter would almost certainly cause the yield curve to become inverted and there would be an ensuing recession. Since there is a substantial demand for risk-free treasuries, the Fed should start removing them from its balance sheet and start selling them into the market, allowing interest rates to find their own equilibrium.
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Zsolt Hermann Apr 29, 2015

First of all even if the US economy is approaching "full employment" I am not sure how much it can measure anything truthfully.
I remember back in Hungary during the Communistic years we always had full employment but I don't think we can say it was a sign of a healthy economy.

The problem is we don't know what to measure and how to measure it since the whole system we exist in, we created for ourselves is artificial, false.
The situation is very similar how today in major newspapers, web-portals we are analyzing movies, TV series alongside real life news as if those artificial stories, and the characters playing in them were also real. We have lost any sight of what is real what is not.

But in fact what is real is the vast natural system we evolved from and still exist in. And that natural system is based on, survives on general balance and homeostasis. And that is maintained by mutually complementing cooperation, mutual responsibility towards the well-being of the whole system and not on ruthless competition, succeeding at the expense of others in order to fulfill excessive and unnatural demands.

Unless we create a human society that resembles the rest of the natural system it does not matter what we measure, and what "solutions" we propose in our "manipulated reality TV show".
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David Olsen Apr 29, 2015

I don't see a US house price boom as yet. I don't see a wage-price inflation spiral caused by excessive wages earned by millennials, far from it
This article is definitely jumping the gun.

Why is all the onus on the Federal Reserve to solve all economic problems? If the author is so concerned about investors putting money into risky investments to earn higher rates of interest perhaps he could prevail on his right wing associates to support infrastructure bonds and infrastructure bills in Congress, thereby creating less risky investment opportunities at higher interest rates.

Households are still paying down debt, companies are still not spending their cash reserves on productive opportunities. The $US dollar is hurting US exporters. Creating further headwinds in the form of a premature interest rate increase before the US recovery is ensured would be foolish indeed.
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jagjeet sinha Apr 29, 2015

External shocks that enhance inflation -and hence interest rate policy - can perhaps be controlled by appropriate management of Security Policy that converts confrontational protagonists into commodity producers. Internal shocks are the more intractable as they seem to emanate from Inequalities that convert into financial implosion. Central Banks rarely seem to be focussed on sectoral deployments within - and appear helpless to rein in asset allocations that enhance concentrations towards financial speculation instead of Real Industry Sectors. Professor Feldstein alluding to the risks that financial institutions and instruments may have enhanced, should rates rise. Time to target Sectoral concentrations on Bank balance sheets by Basle-like ratios, that prevent the need for contingency financing that the Central Banks were forced into. Not too dissimilar to the templates that are in use by the Federal Credit Enhancement Agencies when they define the Target Market and Asset Acquisition guidelines. These are not easy to design but in the light of meltdowns, the need to enhance Real Industry sectoral concentrations rather than again be buffeted by Asset concentrations arising from financial speculation.
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Procyon Mukherjee Apr 29, 2015

Perhaps deeper study would reveal the deflationary effects of QE as prices across a basket of commodities have moved South while financial assets have moved North. An economy where everyone is employed but where prices are falling does not bode well and the solution is not to wait and delay the exit or in doing more of the same.

Financial engineering on the other hand is at its best. Corporates are using the Bond route to buyback their shares and almost every penny of profit is invested in this activity; the risks are underwritten, somewhere.
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John Brian Shannon Apr 28, 2015

Hi Martin,

The solution to runaway inflation in the near future will be rising oil prices.

Once inflation begins to track upwards, it is a given that oil and gas prices will rise correspondingly -- thereby capping the inflation rate.

Not only do we have monetary and fiscal policy levers to control the economy, but now with low oil prices we have the additional lever of oil supply restrictions.

Because we have wisely maintained good relations with the Saudi's and other major oil producers, we have an additional economic lever to help balance our economy. One phone call by a sitting U.S. President to the Saudi king is all it takes!

Whether the oil price goes up, or the oil price goes down, it's all the same to the Saudi's. The wellhead price is the same, it never changes.

The next steps in the value chain are transportation of crude to the refinery, and then the refining costs, and then distribution costs -- all of these costs are simply factored into the wholesale price -- and are routinely passed along to the consumer.

Therefore, there is no loss for the OPEC nations when the oil price rises or lowers. Other than the wellhead price, every cost is passed along to consumers.

Asking the Saudi's to restrict supply can cost them hundreds of millions, perhaps billions of dollars, but can be made up to them in other ways over long periods of time via a fractional increase in the wellhead price.

By wisely keeping the relationship with the Saudi's and other OPEC members cordial, it gives us one more lever to help balance our Western economies. And that's as it should be.

Always great to read your thoughts here at ProSyn, Professor. Thank you for making them available.

As always, very best regards, JBS
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Alexandre Monnard Apr 28, 2015

In my view, the very first sentence of this piece, which serves as an important assumption for the rest of the arguments, is wrong (or at least, severely exaggerated).

The US is not at full employment, nor are we even close. Look at the work recently done by Blanchflower and Levin, and you'll see that the participation gap and the underemployment gap remain quite high as of early 2015. Furthermore, many people who are employed aren't making what they "could" be making, as in, they are overly qualified for the positions they were forced to hold to make ends meet. This will, IMO, lead to an important reshuffling in the employment market when things really start to pick up again.

However, I do agree that low interest rates have caused increased risk-taking on the part of investors, both individuals and corporate. Increasing rates by the Fed must be done very carefully and slowly, but given that their intentions are more or less known (though not the exact timeline), how the markets and overall economy behave for 2015 will give us good insight on how that process will go, as expectations are key and affect the system even before any action is taken (as long as the Fed remains credible, which there is no reason to doubt right now).
- Rick Lipinski May 3, 2015
  
  Agreed, unfortunately this article is not worthwhile due to this fatal flaw. I come to this site because I expect better.
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Kenneth Pao Apr 28, 2015

Somehow reading this short article, I feel that the greatest risks to the US's risky economic recovery, from the 2008 - 2012 global financial storm, will be coming from outside the US not from within. The greatest risks will come in the form of global currency war in a race to currency devaluation due to successive QE's not necessarily to gain export advantage but because, with interest rates near zero, the respective central banks have run out of other ammunition to use.

Perhaps, the author of this article ought to be looking beyond the US border toward international platforms where the central bankers, from around the world, including the key EU, US and China to discuss how best to coordinate the raising of interests within their respective countries and regions without jeopardizing their respective economic recoveries. Comments ?
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Walter Gingery Apr 28, 2015

While I broadly agree with Prof. Feldstein, we're missing an important caveat, viz., Exit from the Balance Sheet Recession.

As long as private households and businesses are paying down debt and repairing their balance sheets, inflation will not be a problem. But as soon as they stop minimizing debt and start maximizing profit again, the money multiplier at the margin will kick in again.

This prospect should absolutely terrify us, given the amount of excess reserves in the banking system as a result of theFed's QE programs.

As of May, 2014, it is estimated that there were reserves in excess of 19.8 times the statutory limits .

Simple textbook economics tells us that this could lead to inflation rates of 2000%.

Unwinding QE presents no easy options.
If the Fed chooses to "sterilize" theses funds by paying the banks NOT to lend them out, it will be expensive. Paying the banks 4% per year on 2.5 trillion dollars will cost $100 billion.
Try explaining to Congress why you are paying the bankers $100 billion dollars a year, just to DO NOTHING>

On the other hand, if the Fed decides to drain reserves from the economy by selling the government bonds it holds, it will have to incur serious capital gains losses. It's a simple matter of supply and demand.

It bought the bonds when demand for government debt was high and prices rose accordingly. It is unlikely that the Fed will be able to sell them for anything like the same price, once the private sector has repaired its balance sheets and is in the market for alternate investments.

Losses could reach$500 billion; while the Fed is capitalized at only $50 billion. I don't think taxpayers, whether Republican or Democrat will be pleased when they get the bill.

In sum, we don't have to worry until the economy has made the switch from minimizing debt to maximizing profit. But then, watch out!
- Walter Gingery Apr 28, 2015
  
  All the same, one cannot overemphasize the danger of PREMATURE fiscal and monetary consolidation.
  
  This is the mistake that Roosevelt made in 1937 and the Japanese made in 1997. It derailed recovery for years and made the ultimate recovery far more expensive.
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Lance Brofman Apr 28, 2015

Clearly, the Federal Reserve and Janet Yellen will mostly be basing their decision making on economic data. However, there will be a significant behavioral science aspect involved as well. While there are 12 voting members on the Federal Reserve Open Market Committee, previous experience suggests that the view of the Chair of the Board of Governors is by far the most important. There have been dissents in votes on the Federal Reserve Open Market Committee. However, the votes have never gone against the wishes of the chair.
Separate from any forecast of the economic variables, I think there are some reasons why I believe that Janet Yellen will be reluctant to raise short-term rates. Were the Federal Reserve to raise rates, Janet Yellen would be asked in her periodic testimony to Congress something similar to the following question: Is it true that the purpose of the Federal Reserve raising interest rates was to reduce the number of people in the USA with jobs and in that way suppress the growth in wages?
Only if a raging wage-price spiral was in full force would she be totally comfortable answering that question. I think Janet Yellen's greatest fear is being responsible for another 1937. Most agree that the premature Federal Reserve tightening in 1937 worsened the depression. A more speculative theory related to the fear of another 1937 could be related to the fact that Janet Yellen is the first female chair of the Board of Governors. In one of her possible nightmares, not only is she blamed for the economy tanking as a result of her raising short-term rates, but people unfairly using that as an argument against electing Hillary Clinton as the first female president..."
http://seekingalpha.com/article/3101776
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