US stimulus now or in September?

Is it time for the policymakers at the Federal Reserve to introduce some stimulus measures to try to energise the moribund US economy or will they leave that until September?

Their two-day meeting on Tuesday and Wednesday comes after the world’s largest economy expanded by just 1.5 percent between April and June.

Fed chairman Ben Bernanke and his colleagues have expressed concern about job growth and consumer spending in the US both of which are weakening.

They are split over whether further quantitative easing – that is printing more dollars to buy government bonds – would be effective.

US economy still weak

US home prices rose for the fourth month in a row in May, suggesting the recovery in the housing market continued to gain traction.

In other data released on Tuesday, consumer confidence unexpectedly rose in July but spending fell in June for the first time in nearly a year when taking inflation into account.

The S&P/Case Shiller composite index of 20 metropolitan areas gained 0.9 percent in May on a seasonally adjusted basis, topping economists’ expectations for a 0.5 percent gain.

The housing market, which collapsed during the 2007-2009 recession, has been a relative bright spot in the economy this year, although it remains hobbled by a glut of unsold homes.

Consumer spending, which makes up about 70 percent of US economic activity, fell 0.1 percent in June after adjustment for rising prices, the Commerce Department said in a separate report.

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