Dollars and Jens
Friday, June 26, 2009
Trimmed-mean PCE is out. 1.3% (annual rate) for May.

On this measure, I tend to look at an exponential six-month average, which has just dipped below 2%, to 1.96%; the monthly figures have been lower than this for the last three months. This moving average hit 1.55% in 2003.

The trimmed-mean PCE deflator still isn't suggesting either (bad) inflation or deflation.

Thursday, June 25, 2009
GDP Q1 final
IV 06I 07II 07III 07IV 07I 08II 08III 08IV 08I 09
Gross domestic product1.
Nondurable goods.
Durable goods.
Change in private inventories-1.41-
Fixed investment-1.27-.57.47-.15-.97-.86-.25-.79-3.36-5.99
Net exports of goods and services1.33-1.201.662.03.94.772.931.05-.152.39
Government spending.
Small changes to inventories and net exports.


Wednesday, June 24, 2009
The FOMC statement, as revised:

Information received since the Federal Open Market Committee met in March indicates that the economy has continued to contract, though April suggests that the pace of contraction appears to be somewhat slower economic contraction is slowing. Conditions in financial markets have generally improved in recent months. Household spending has shown further signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Weak sales prospects and difficulties in obtaining credit have led businesses to cut Businesses are cutting back on inventories, fixed investment, and staffing fixed investment and staffing but appear to be making progress in bringing inventory stocks into better alignment with sales. Although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, Although economic activity is likely to remain weak for a time. Nonetheless, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.

In light of increasing economic slack here and abroad, The prices of energy and other commodities have risen of late. However, substantial resource slack is likely to dampen cost pressures, and 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 for some time.

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 continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is facilitating the extension of credit to households and businesses and supporting the functioning of financial markets through a range of liquidity programs. The Committee will continue to carefully monitor monitoring the size and composition of the Federal Reserve's its balance sheet in light of financial and economic developments and will make adjustments to its credit and liquidity programs as warranted.

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.


Tuesday, June 23, 2009
financial regulation
For more than a decade, banks have been restricted by accounting standards and the Securities and Exchange Commission from building capital reserves for loan losses that are likely to occur but difficult to predict.

"Banks felt under pressure to keep reserves thin," said Eugene Ludwig, the former comptroller of the currency who now heads consulting firm Promontory Financial Group LLC.
Read how Sun Trust was forced into imprudence by regulators. I think there are new regulations we should explore, but any discussion as to whether we need "more" regulation or "less" would benefit from the acknowledgement that "regulation" is not a homogeneous substance.

Monday, June 01, 2009
income and spending
Personal income was up in April but spending was slightly down. Employee compensation reported a month-over-month increase for the first time in a while, which may be the more heartening statistic, if you consider that "transfer receipts" are a big contributor to the increase in the headline number, and that those include unemployment insurance payments (which are, after all, income). The personal savings rate is reported at 5.7%. Of course, even those of us who generally advocate for more saving by Americans would rather this turned into domestic investment and a smaller trade deficit than a government deficit. It will be interesting to see how these different figures change if and when the economy recovers.


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