This Chart Shows Why the U.S. Fed Is Reluctant to Raise Interest Rates
U.S. GDP growth is a story of peaks and valleys.
U.S. Fed chief Janet Yellen kept interest rates near zero Wednesday, further delaying a long-expected interest rate hike. It’s an indication the U.S. central bank doesn’t think the American economy is strong enough to overcome an increase to the cost of borrowing. U.S. gross domestic product growth numbers released Thursday show why.
Since the depths of the Great Recession, the United States has been unable to sustain consistent, positive economic growth. Check out the chart below. It shows U.S. GDP growth by quarter since the start of 2009.
As you can see, U.S. economic output has been spotty, at best. It’s a story of peaks and valleys: Periods of strong growth have been followed by lulls, meaning growth has been inconsistent and hard to sustain.
Yellen and her colleagues on the Federal Open Market Committee consider numerous data points before making their decision on whether to increase the cost of borrowing, which could discourage businesses and consumers from taking on debt. The most basic measure of the health of a national economy — its economic output — shows why they’re being cautious before lifting interest rates for the first time since 2006.
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