Forex Blog: Currency Trading News & Analysis.

April 21st 2005

US in ‘Sweet Spot’

In a recent interview, Treasury Secretary John Snow said the US economy is currently in a ‘sweet spot.’ Most economic fundamentals underscored by a high real GDP growth rate, signifies the US economy is indeed strong. Bond traders have largely reinforced this belief, as bond spreads are extremely thin, which signify investors’ confidence in the economy. However, warned Snow, the US will not likely remain is this buoyant position for long. The CPI rose by .4% last month (4.8% annualized), which has some economists worried about inflation. Most of the increases in price have occurred in transportation and energy, and may only be short term increases. Snow also addressed the United States’ widening fiscal and trade deficits. Adopting more fiscal prudence, and forcing China to revalue its currency, will solve each of the problems, respectively, said Snow. Reuters reports:

"Although we’ve seen some softer numbers in some areas, the overall picture remains very, very good," Snow told reporters. "The fundamentals are still strong. I’m confident the American economy is going to continue to have good growth in a basically non-inflationary environment."

Read More: Snow dismisses stagflation, as CPI spikes up

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Posted by Adam Kritzer | in US Dollar | No Comments »

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