Dollars and Jens
Friday, March 27, 2009
income and spending
Of course if trimmed-mean PCE is out, that means NIPA is out, too. The numbers aren't what you'd call "good", but the positive surprise from the January report hasn't been fully negated, so it's worth noting that Q1 GDP is likely to look substantially better on PCE terms than Q4 did, though I presume the overall figure will still be negative. I haven't seen any forecasts lately, and anyone who takes my forecast seriously would deserve to be mocked without mercy, but I'm envisioning something like a -2% annual rate, which is higher than the last guesses I've heard (which were in February).

The Dallas Fed's trimmed-mean PCE inflation rate is out for February. Note that it's been doing what a core inflation measure should be doing: over longish time periods it tracks the overall inflation measure, while for shorter time periods it's much less volatile. (Ideally it should be a decent predictor of inflation in the future.)

It's worth noting that the trimmed-mean PCE has only had one reading below 1.48 in the last five years (which was two months ago); it's not providing any confirmation of other possible signs of deflation.

Thursday, March 26, 2009
III 06IV 06I 07II 07III 07IV 07I 08II 08III 08IV 08
Gross domestic product.
Nondurable goods.
Durable goods.
Change in private inventories-.11-1.41-
Fixed investment-.81-1.27-.57.47-.15-.97-.86-.25-.79-3.36
Net exports of goods and services-.121.33-1.201.662.03.94.772.931.05-.15
Government spending.

The final report. Much like the preliminary report last month. On a psychological level (or something), it may be notable that the inventory contribution has changed sign; I would only call that interesting because the advanced number was so large, and now it's going (slightly) the other way.


Wednesday, March 18, 2009
FOMC statement
The FOMC statement:

Information received since the Federal Open Market Committee met in January indicates that the economy continues to contract. Job losses, declining equity and housing wealth, and tight credit conditions have weighed on consumer sentiment and spending. Weaker sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories and fixed investment. U.S. exports have slumped as a number of major trading partners have also fallen into recession. Although the near-term economic outlook is weak, the Committee anticipates that policy actions to stabilize financial markets and institutions, together with fiscal and monetary stimulus, will contribute to a gradual resumption of sustainable economic growth.

In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued. Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.

In these circumstances, the Federal Reserve will employ all available tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and anticipates that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide greater support to mortgage lending and housing markets, the Committee decided today to increase the size of the Federal ReserveĆ­s balance sheet further by purchasing up to an additional $750 billion of agency mortgage-backed securities, bringing its total purchases of these securities to up to $1.25 trillion this year, and to increase its purchases of agency debt this year by up to $100 billion to a total of up to $200 billion. Moreover, to help improve conditions in private credit markets, the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months. The Federal Reserve has launched the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses and anticipates that the range of eligible collateral for this facility is likely to be expanded to include other financial assets. The Committee will continue to carefully monitor the size and composition of the Federal Reserve's balance sheet in light of evolving financial and economic developments.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans; Donald L. Kohn; Jeffrey M. Lacker; Dennis P. Lockhart; Daniel K. Tarullo; Kevin M. Warsh; and Janet L. Yellen.

The big news here is the purchase targets for the various securities, particularly (perhaps) for the purchase of longer-term treasuries.


Bank Lending
From the WSJ:
You thought banks weren't lending, right? A quarterly survey of banks by the Federal Reserve, released Tuesday, contradicts that notion.

Tuesday, March 10, 2009
Nine years ago today, the Nasdaq index closed at 5048.62 after hitting an intra-day high of 5132.52. Today, a strong rally has taken it above 1300.

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