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The final weeks of 2011 were among the economy's strongest as Americans shopped and traveled more, ending the year with a shot of optimism for 2012. That's the bright picture the Federal Reserve sketched in a survey released Wednesday.
The Federal Reserve plans to stress test six large U.S. banks against a hypothetical market shock, including a deterioration of the European debt crisis, as part of an annual review of bank health. The Fed said it will publish next year the results of the tests for six banks that have large trading operations: Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo.
A year after the Federal Reserve enacted new rules to rein in abusive bank overdraft practices, fees remain high and some institutions actually have slapped on additional penalties, according to a new survey by the Consumer Federation of America.
Federal Reserve officials raised concerns last month that a big jump in energy prices could weaken the economy and unleash inflation, prompting a few to suggest the possibility of tightening credit -- and increasing interest rates -- this year.
Some investors have been running scared after the quake and tsunami that devastated parts of Japan and left it with an ongoing nuclear crisis. But when there's gloom in the air, there's also opportunity to buy on the dip and gain from the rebound.
When a Federal Reserve committee meets Tuesday to consider the federal interest rate, it will likely revise its glum outlook into something brighter. But will it also acknowledge the U.S.'s growing inflation problem?
The U.S. services sector is growing strong, providing additional evidence that the U.S. economy is recovering and might not need more stimulus funding. But that's contingent upon oil staying below $120 per barrel.
Despite all the worry over the impact of rising oil prices, recall that the U.S. is now a largely services-based economy. And observe that the rising wages that have led to real overall cost rises in decades past are nowhere to be found today. Exhibit A is in Wisconsin.
Inflation has inched higher in the past six months, but that's not a danger sign, but rather a harbinger of improving economic conditions and a strengthening recovery. And that, in turn, should lead to higher wages and more hiring in the year ahead.
It's no surprise that consumer prices are rising -- the prices of commodities from corn to cotton to copper are near record levels, thanks to shrinking supplies and rising demand worldwide. The question is whether the Fed will raise rates to combat this price inflation -- and whether it should.

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