wealth effect

The Big, Continuing Stories That Could Derail 2011

Major news stories ebb and flow, rising to the headlines and then slipping out of the spotlight. But even as they fade from attention, keep an eye on this handful of long-term issues with the potential to disrupt the U.S. economy and global recovery.

The Fed's QE2: Boosting Stocks -- and 'Animal Spirits'

Bernanke & Co. seems to becoming increasingly aware of the big impact that rising "animal spirits" (in John Maynard Keynes's famous words) can have on the stock market and, in turn, the broader economy. Creating a self-fulfilling positive prophecy is the goal.

Why the Fed's Economic Plan Is Failing

Bernanke & Co.'s zero-interest-rate policy is backfiring or having even more pernicious results. Only the wealthy benefit from rising financial assets, as average Americans -- encouraged to add to their indebtedness -- are further impoverished. Risky speculation is again being rewarded.

For American Households, the Recession Lingers

Officially underway since June 2009, the recovery has been tepid at best. The balance sheet of the average household is still straining under considerable debt, while incomes have barely risen, suggesting that the recovery has a shaky foundation.

U.S. Home Prices Rose Faster Than Expected in April

The U.S. housing sector improved a bit more than expected in April, as home prices in 20 major cities rose 3.8% on a year-over-year basis, according to the S&P/Case-Shiller survey. But is rising housing demand real, or was it a temporary surge from the now-expired home buyer tax credit?

Consumer Spending Is Up:
Is the 'Wealth Effect' Back?

Retail sales rose in March for the fifth month in a row, sparking a surge of optimism that the recession is over. Personal consumption figures are rising modestly, and luxury goods sales are making a big comeback. But are Americans feeling prosperous enough to revive the "wealth effect"?