There’s been much discussion about the progression of our nation’s economy. Among the chatter has been the phrase an “overheating economy,” but what exactly does that refer to? Well, many economists, and investors, worry that the economy might be growing too fast. While it certainly is rebounding, experts fear inflation and think prices will spike too quickly, potentially stalling recovery efforts. In regard to inflation and President Biden’s new spending bill, U.S. Treasury Secretary Janet Yellen has insisted that the Federal Reserve will handle any that arises.

 

CNN Business/Anneken Tappe
Everyone is worried the economy is ‘overheating’. But what does that actually mean?

The economy is on the path to recovery but it’s still far from repaired. Yet investors and economists are already worried it might be growing too fast. Here’s what experts actually mean when they talk about the “overheating” economy.

Just over a year ago, the US economy faced its worst downturn on record as businesses shuttered and the nation hunkered down in the face of the pandemic. Economic activity ground to a halt last spring and then rebounded over the summer.

This rebound is ongoing, but we’re not quite back to normal. For example, the size of the economy was nearly $19.1 trillion at the end of March, some $166 billion lower than it was at the end of 2019, before the pandemic hit. America is also still down more than 8 million jobs compared with February 2020.

That’s all good news. So why are some experts worried?

In a word: inflation.

Keep reading, here.

 

Fox Business/Peter Aitken
Yellen insists Fed will monitor inflation, has tools to control it as Biden plan under scrutiny

U.S. Treasury Secretary Janet Yellen has insisted the Federal Reserve is able to handle any inflation that results from President Biden’s new spending bill, with critics worrying that the incredible amount of money spent will lead to countless problems in the economy.

Biden has pushed forward plans totaling $4 trillion in taxes and spending, but so far Republicans have not shown much support for any parts of it.

Chief among concerns about the plans is how the Democrats plan to fund the bill, as well as the possibility that such aggressive spending will lead to inflation issues.

Yellen told NBC’s “Meet the Press” that those concerns are valid, but the government has the tools to prevent such issues from arising.

“It comes into effect once the economy is back on track and the spending from the rescue plan … is spent,” Yellen told Chuck Todd on Sunday. “It’s spread out quite evenly over eight to 10 years.”

“We will monitor that very carefully,” Yellen added. “We’re proposing that the spending be paid for. And I don’t believe that inflation will be an issue. But if it becomes an issue, we have tools to address it.”

See why Yellen thinks these “historic investments” will help make the economy more productive, here.

 

Kitco News/Jim Wyckoff
Gold, silver see good price gains on bullish outside markets

Gold and silver prices are solidly up in early U.S. trading Monday, on some perceived bargain hunting and amid bullish outside market forces that include a weaker U.S. dollar index and slightly firmer crude oil prices. The gold and silver bulls have regained the slight near-term technical advantage. June gold futures were last up $17.90 at $1,785.60 and July Comex silver was last up $0.652 at $26.53 an ounce.

Global stock markets were mixed overnight, with Asian shares mostly weaker and European shares mostly firmer. U.S. stock indexes are pointed toward higher openings when the New York day session begins. U.S. traders and investors are upbeat to start the trading week, amid recent economic data that generally depicts strengthening U.S. business activity, and a drop in Covid-19 cases that suggests the pandemic is finally loosening its grip on the world’s largest economy.

There was also some upbeat news coming out of the Euro zone Monday. The region’s April manufacturing purchasing managers index (PMI) came in at 62.9 following a March reading of 62.5. A number above 50.0 suggests growth in the sector.

The key outside markets today see the U.S. dollar index lower. Nymex crude oil prices are slightly up and trading around $64.00 a barrel. Meantime, the yield on the benchmark 10-year U.S. Treasury note is presently fetching around 1.646%.

Read the full story, here.

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