Tags: Sri-Kumar | Federal Reserve | economy | strength

Economist Sri-Kumar: Fed Overestimates Economy's Strength

By    |   Tuesday, 22 July 2014 08:51 PM

Most Federal Reserve policymakers expect the economy to grow 2.1 to 2.3 percent this year, but once more the Fed is overly optimistic, says Komal Sri-Kumar, president of Sri-Kumar Global Strategies and a senior fellow at the Milken Institute.

He predicts growth of 1 to 1.5 percent.

"The Fed has been consistently wrong since 2009," when the economy began its recovery from the recession, he told Yahoo.

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"You want to listen to them because that is what they are going to anchor their monetary policy to, but then you know that they are not going to be correct."

Kumar wasn't impressed with June's 288,000 payroll gain. Most of the hires were for part-time jobs, with full-time jobs actually falling, he noted.

In addition, wages have risen only 2 percent during the last year, trailing the 2.1 percent increase in consumer prices, Kumar said. He believes consumer spending will remain sluggish.

Personal consumption expenditures advanced just 0.2 percent in June.

Meanwhile, Nobel laureate economist Paul Krugman of Princeton University has a mixed view of the economy. "Things are getting better, finally. It's starting to look like a real recovery," he told Fareed Zakaria on CNN.

"But it's not a boom. And this is after many, many years of terrible performance. . . . I would say it [the economy] is half-full, half-empty. More half-empty than half-full, because we should be doing much better than this."

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Most Federal Reserve policymakers expect the economy to grow 2.1 to 2.3 percent this year. But once more the Fed is overly optimistic, says Komal Sri-Kumar, president of Sri-Kumar Global Strategies and a senior fellow at the Milken Institute.
Sri-Kumar, Federal Reserve, economy, strength
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2014-51-22
Tuesday, 22 July 2014 08:51 PM
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