The Federal Reserve should abandon its monetary stimulus program, a new report suggests.
But instead of doing so, the central bank should focus on improving productivity, the Institute for Policy Research and Education (IPSRE) report says.
The report, “Economic Impacts of Federal Reserve Policy,” finds that the Fed has made the economy more productive, which is why it has been able to lift the unemployment rate from 9.9 percent to 4.9% and the inflation rate from 2.6% to 3.9%.
But in order to make a positive impact on productivity, productivity should be improved, not just lowered, the report says, according to the Washington Examiner.
“The Fed’s economic stimulus policies are largely ineffective in improving productivity and have made it more difficult for the United States to achieve its full potential as a manufacturing and service economy,” IPSRE’s study says.
According to the IPSRE report, a key factor in the economy’s productivity is the amount of capital that is being created.
“Capital investment is crucial to a productive economy,” the report said.
“To date, the U toltrs investment policies have largely failed to deliver economic benefits.”
The report found that the stock market’s performance is negatively impacted by low investment.
“If the Fed does not change its investment policies, stocks could continue to decline,” IPSRe’s report said, according the Examiner.
The IPSRE study also found that low productivity is harmful to the U, as well as the economy as a whole.
The report says the U’s low productivity growth has caused the stock and housing market to “decline sharply and have a negative impact on overall U. seconomic well-being.”
S stock markets are expected to decline 5.6 percent, to $8,769.25, by 2019,” the IPSRe report said in a note to clients.
“In addition, the housing market will drop 3.7 percent, from $16,723.08 to $9,908.78.”
The IPSRe study also said that the U has the third highest amount of debt in the world, at $1.26 trillion.
“This is the third-highest amount of household debt in human history, behind only Japan and Germany,” the study said.
The U. S. economy has been on a downward spiral since the beginning of the Great Recession in 2008, according a report by Moody’s Analytics.
In its most recent report, the ratings agency warned that “there is little doubt that the economic outlook for the U S. is deteriorating.”
“We have been experiencing a prolonged period of economic weakness since the onset of the crisis in the summer of 2009, when the U s economic activity was already declining by 1.7% in the third quarter of 2010,” the Moody’s report read.
Moody’s also said the US. is currently “at risk of a ‘fiscal cliff,’ which could see a steep drop in GDP in the first quarter of 2019, leading to a recession.