With short term interest rates being considerably low, the Federal Reserve has little room to cut borrowing costs to bolster spending and investment in the event of an economic downturn. With national debt ballooning, efforts to boost growth through tax cuts or spending increases will be weakened. To add complication to the matter, both sides of the aisle (even amongst the ranks of the right and left), cannot seem to agree on ways to promote spending in the economy whether it be through higher government spending or through tax breaks. Meanwhile, our president is continuing to pressure a divided Federal Reserve for more interest rate cuts and is suggesting additional economic stimulus.
Having seen a fair share of warning signs, with economic growth slowing, job growth weakening, housing starts declining, and long term rates at times being overtaken by short-term rates, are we heading towards the end of our record-breaking economic expansion? If so what options do we have to bolster economic growth? or are our traditional avenues already Kaput (broken)?