What economic factor is keeping the U.S. from better growth?
What economic factor is keeping the U.S. from better growth?
JEREMY HOBSON: It’s all about Greece, yet again. This morning’s news: no agreement yet on a new round of European bailout money for Athens.
And that’s where we’ll start with our regular Monday analyst. Julia Coronado, chief economist at the investment bank BNP Paribas. She’s with us live from New York live as always. Good morning, Julia.
JULIA CORONADO: Good morning.
HOBSON: Well Julia, I’m gonna give you a multiple choice question, if that’s all right. Which of the following is keeping the U.S. economy from growing as fast as it could be: the Greek debt crisis, the supply chain disruptions from the Japan quake, the debate over the debt ceiling and spending cuts in Washington, or the end of the Fed’s big bond buying program?
CORONADO: I’m going to choose E, none of the above. I think that we have to keep in mind as Chairman Bernanke reminded us a couple of weeks ago, we’re still coming out of the greatest financial crisis and the biggest housing bust since the Great Depression. Housing is one of the key areas that’s underperformed in the first half of the year and it’s just going to take some time to work through some of these issues. Those other issues you mentioned certainly add layers of uncertainty and a bit of headwind, but I think fundamentally most of the issues that are holding us back are domestic in nature.
HOBSON: Well if it’s still housing as the big problem, is everything being done to fix that problem?
CORONADO: Well, I think that policy makers in Washington have gotten a bit of a splash of cold water with the weakness in the May employment report and some of the weak data. I think it should serve as a reminder to them how fragile things still are. So while they tackle important issues like the debt ceiling and the longer term fiscal issues, I think they need to keep their eyes on the ball of keeping the economy on track in the near term at the same time.
HOBSON: Julia Coronado, chief economist with the investment bank BNP Paribas, thanks so much as always.
CORONADO: My pleasure.
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