The Green Economy
August Economic Update
The U.S. economy was supposed to be well on its way to full recovery by now. It’s seems a lifetime ago, but it was only a few months ago that talk about inflation and economic growth was raising the issue of interest rates increases by the Federal Reserve. Instead, the Fed has kept interest rates close to 0% in an attempt to kickstart economic growth, jobs, and consumer spending. The threat of double-dip recession, once considered unlikely, is now back on the table again. The Fed has done their part by pledging to reinvest the $2 trillion back in to U.S. government securities. The funds were originally used to prop up the mortgage market, but are now becoming available for a different form of stimulus. The goal? To keep interest rates low for the foreseeable future. The plan is working so far, as yields on Treasuries and mortgages record historic lows:
90-day Treasury yield = 0.15%
180-day Treasury yield = 0.19%
2-year Treasury Bill yield = 0.52%
15-year Fixed Mortgage Average = 3.95%
30-year Fixed Mortgage Average = 4.49%
Consumers are benefiting with lower payments on credit cards, home equity loans, personal loans, and variable-rate mortgages. Rates this good may not be seen for years to come, but the reality is that it may not be enough. Jobs are the engine that drives the U.S. economy. Without jobs, consumers don’t spend. Without spending, companies are without profits. And without profits, companies don’t hire. This is the vicious cycle that the Fed, in some ways, is powerless to help against.
Green banks, without a doubt, are faring better than their counterparts. A Democratic president and Congress, the recent BP oil spill, as well as the popularity of online banking – have all helped propel green banking into the forefront. Large TARP banks like Citigroup, Wells Fargo, PNC Bank, and US Bancorp are less popular than ever in the current climate. Green banks have a chance to grab more customers if they market their green banking deals and deposit rates. Several new green banks have launched (or are launching) and other green banks are promoting new eco-friendly bank products like reward checking, green loans, and green mortgages.