FEDERAL RESERVE BANK OF SAN FRANCISCO JULY 2012 STATEMENT ON THE ECONOMY

The economy is recovering — but it isn’t. This is essentially the Federal Reserve Bank of San Francisco’s (FRBSF) most recent mixed message on the state of the economic recovery.
A rather stale and well-tread outlook on the economy and monetary policy is offered in the FRBSF’s July Economic Letter, as sound and reasonable as it is. Essentially, the economy is recovering, but at a snail’s pace. Here are the reasons why:

• government fiscal policy (raising taxes, cutting spending) is threatening continued growth; and
• instability in the Eurozone, coupled with stagnating austerity measures, continue to put the brakes on the U.S. economic recovery.

While the FRBSF insists the economy is growing, inflation is stable and near target and GDP is set to grow around 2%, they also admit that this growth is not robust enough to meet their mandate of full employment and stable pricing.
What’s to be done? A continuation of Operation Twist, the Fed’s creative bond buying program designed to lower long-term interest rates, and another possible round of quantitative easing to inject more cheap cash into the banking system and encourage consumer lending.

It sounds as if it is business as usual. Do you have an opinion as to how our local economy here in Nevada County is doing?