Right Hooks

Obama's Economy Has Trapped the Fed

There are indications that the nation is about to head into another recession.

Dan Gilmore · Jun. 16, 2016

Seeing no end to the economic reality Barack Obama created, the Federal Reserve announced that it would not raise interest rates in June. “The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation,” the Federal Open Market Committee said in a statement. The decision comes as growth in the labor force stalled if not declined during the month of May. Furthermore, with the housing sector and household spending picking up, an increase of the interest rate would likely tank those modest gains. After all the jiggering and conniving the Federal Reserve did to (allegedly) get the American economy out of the Great Recession, it has found itself painted into a corner.

“The Keynesian economists who have run U.S. economic policy since 2008 are clearly stumped,” opined The Wall Street Journal. “First they said $800 billion in fiscal stimulus would stir a return to prosperity, then they said that monetary stimulus would do the trick. Now they blame their failure on ‘secular stagnation’ and Republicans in Congress whose pro-growth proposals have been blocked at every turn by Senate Democrats and President Obama.”

And while watchers of the economy are frustrated at the Fed’s inability to act, there’s little it can do. “Recognizing that virtually all postwar U.S. recessions were preceded by excessive Fed rate hikes, Fed Chair Janet Yellen at least seems to have learned from history. Kudos,” wrote Investor’s Business daily. Indeed, there are indications that the nation is about to head into another recession. Deutsche Bank predicts there a 55% chance of a recession next year, and businesses have slowed down their hiring and production, among other indicators, signaling that they are not making any firm, long-term plans. With the stagnation, Obama’s tepid economy will be a problem the next president will most likely inherit.

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