Easing Could Help Growth Increase in 2011: Economist
Slow growth will continue over the next few quarters, at 1.5 percent to 2 percent, but could go up to 3 percent in the second half of 2011 due, in part, to quantitative easing (QE), Jan Hatzius, chief US economist at Goldman Sachs , told CNBC Wednesday.
Hatzius said that he thought the QE, announced by the Federal Reserve Wednesday, is “significant,” but not “dramatic,” and that its impact won’t be felt immediately. The Fed agreed to buy $600 billion more in government bonds by the middle of next year in an attempt to boost the US economy
“Financial conditions have been easing over the last couple of months in the anticipation of this [QE], and that should support the economy going forward,” he said.
Hatzius also predicted a continued slow housing market, with prices falling.
“The main thing that’s holding back housing is such a large supply of excess housing,” said Hatzius. “The vacancy rates and inventory of unsold homes have come down a bit. In that environment, you don’t need to build a lot of homes and the pressure on prices is going to be on the downside as well.”