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US fiscal, money policy at a dead-end

Business Times - 10 Aug 2011


US fiscal, money policy at a dead-end

Political paralysis in Washington may put pressure on the Fed to help re-energise the economy and cut the jobless rate

By LEON HADAR
WASHINGTON CORRESPONDENT

AFTER a week dominated by a series of bad economic reports - ranging from the political deadlock on cutting national debt in Washington to the mounting financial crisis in the euro zone - it sounded like a piece of good economic news that should cheer up officials and investors: US unemployment has dropped.

Indeed, the US Labour Department report indicated that employers added more jobs in July than forecast, with payrolls rising by 117,000 workers after a 46,000 increase in June. Overall, the jobless rate fell to 9.1 per cent in July from 9.2 per cent in June.

But deconstructing these figures made it clear that what they signalled was not going to lift the spirits in Washington or on Wall Street. The-glass-is-half-full spinning of the numbers would be that joble…