One of the forces with the most influence on the economy is the Federal Reserve Board’s influence on interest rates. Some types of interest rates can affect consumer borrowing which affects consumer spending. Because the Federal Reserve Board gets so much media attention, its actions have a psychological effect, influencing impressions of the country’s economic health.
As it turns out, consumer spending is influenced by interest rates. We can see that interest rates do in fact lead to spending. Increases in Fed rates presage economic turndowns and vice versa.
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Ahead of the Curve will arm you with the knowledge you need to deflect useless theories and reject hype. Economic analysis can be a do-it-yourself activity. Instead of tracking absolute increases and declines, the methods in this book look at changes in growth to make economic forecasts. The tools are based entirely on examining historical data for recurring patterns.
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The Fed rate is also tied to inflation, which impacts earnings, which affects consumer spending. Inflation also moves hourly wages and direct interest rates. This can create the impression that interest rates and consumer spending are more closely related than they are.
The Federal Reserve...
To figure out the relationship between the federal deficit and interest rates, you have to remember that federal debt is just one category of all the debt in the economy.
There’s also state and local government debt, not to mention consumer debt and corporate debt. In fact, of all the deb...
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