The economy grew only 2.2 percent in the fourth quarter, and the Atlanta Federal Reserve's forecasting model puts growth at only 0.1 percent for the first quarter.
What's to blame? Partly the Fed, says Wall Street Journal reporter Greg Ip
. "The growth deceleration should not come as a surprise, because the Fed has already tightened," he writes.
"True, the Fed’s interest-rate target remains close to zero. But the Fed tightens through its words, not just its actions, and the drumbeat of chatter from the Fed in the last year has made it clear that officials plan to start raising rates sometime this year."
That talk has put a lid on the stock market. It also has sent the dollar soaring to multi-year highs against a range of currencies, putting a dent in exports and corporate earnings.
So what should the Fed do?
"The tightening in financial conditions has already done much of the work that its first interest-rate increase was supposed to accomplish. This is a good reason to either delay the start of tightening, tighten more slowly, or both," Ip argues.
Many economists expect the Fed to begin raising rates in September.
Meanwhile, Marc Faber, publisher of the Gloom, Boom & Doom Report, sees central banks as responsible for economic sluggishness worldwide.
"The global economy is not strengthening. It is weakening," he tells CNBC
. "China is weakening. The U.S. economic statistics recently have been on the weak side." China's economy grew 7 percent in the first quarter, its worst showing in 6 years.
The Fed made a mistake in cutting short-term interest rates to almost zero, Faber notes. "The monetary policies as conducted by the Fed have created a lot of unaffordability in the system."
And Faber feels the same way about the easing programs of other central banks. "There's a big bubble in debt, in financial assets. But the biggest bubble is the belief that central bankers know what to do. They have no clue. That is the biggest bubble," he states.
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