Take in some recent newspaper headlines or TV reports, especially of the pop economic variety, and you may be excused for thinking that a severe economic recession is about to descend. Why? Because the US economy, that engine of global growth, appears to be faltering. Despite an unprecedented five interest rate cuts since January 2001, the money-making engine refuses to fire up. The Dow Jones Index was at 10,945 when Federal Reserve Bank chairman Alan Greenspan announced the first cut on 3 January 2001. By mid-May, four rate cuts on, the index was down at 10,872. Prospects for more cuts took a nosedive when Greenspan admitted in May that inflation was probably now too high. The economic medicine bottle looks empty.
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