|III 07||IV 07||I 08||II 08||III 08||IV 08||I 09||II 09||III 09||IV 09||I 10||II 10||III 10||IV 10||I 11||II 11|
|Gross domestic product||3.0||1.7||-1.8||1.3||-3.7||-8.9||-6.7||-.7||1.7||3.8||3.9||3.8||2.5||2.3||.4||1.0|
|Change in private inventories||-.28||-.77||-.66||-.14||-.73||-1.54||-2.66||-.58||.21||3.93||3.10||.79||.86||-1.79||.32||-.23|
|Net exports of goods and services||1.55||2.22||.38||2.00||.79||-.12||2.44||2.21||-.59||.15||-.97||-1.94||-.68||1.37||-.34||.09|
The FOMC statement, as revised:
Information received since the Federal Open Market Committee met in
AprilJune indicates that the economic recovery is continuing at a moderate pace, though somewhat more slowlyeconomic growth so far this year has been considerably slower than the Committee had expected. Also, recentIndicators suggest a deterioration in overall labor market indicators have been weaker than anticipatedconditions in recent months, and the unemployment rate has moved up. The slower pace of the recovery reflects in part factors that are likely to be temporaryHousehold spending has flattened out, investment in nonresidential structures is still weak, and the housing sector remains depressed. However, business investment in equipment and software continues to expand. Temporary factors, including the damping effect of higher food and energy prices on consumer purchasing power and spending as well as supply chain disruptions associated with the tragic events in Japan, appear to account for only some of the recent weakness in economic activity. Household spending and business investment in equipment and software continue to expand. However, investment in nonresidential structures is still weak, and the housing sector continues to be depressed. Inflation hasInflation picked up in recent monthsearlier in the year, mainly reflecting higher prices for some commodities and imported goods, as well as the recentsupply chain disruptions. However, longer-termMore recently, inflation has moderated as prices of energy and some commodities have declined from their earlier peaks. Longer-term inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability.
The unemployment rate remains elevated; however, the Committee expects theThe Committee now expects a somewhat slower pace of recovery to pick upover coming quarters andthan it did at the time of the previous meeting and anticipates that the unemployment rate to resume its gradual declinewill decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Inflation has moved up recently, but the CommitteeMoreover, downside risks to the economic outlook have increased. The Committee also anticipates that inflation will subside tosettle, over coming quarters, at levels at or below those consistent with the Committee's dual mandate as the effects of past energy and other commodity price increases dissipate further. However, the Committee will continue to pay close attention to the evolution of inflation and inflation expectations.
To promote the ongoing economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent. The Committee
continues to anticipatecurrently anticipates conditions — including low rates of resource utilization and a subdued outlook for inflation over the medium run — are likely to warrant exceptionally low levels for the federal funds rate for an extended period. The Committee will complete its purchases of $600 billion of longer-term Treasury securities by the end of this month andat least through mid-2013. The Committee also will maintain its existing policy of reinvesting principal payments from its securities holdings. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.
will monitordiscussed the range of policy tools available to promote a stronger economic recovery in a context of price stability. It will continue to assess the economic outlook and financial developments and will act as needed to best foster maximum employment and price stabilityin light of incoming information and is prepared to employ these tools as appropriate.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Charles L. Evans;
Richard W. Fisher; Narayana Kocherlakota; Charles I. Plosser;Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen.
Voting against the action were: Richard W. Fisher, Narayana Kocherlakota, and Charles I. Plosser, who would have preferred to continue to describe economic conditions as likely to warrant exceptionally low levels for the federal funds rate for an extended period.Possibly moved phrases:
, investment in nonresidential structures is still weak, and the housing sector
business investment in equipment and software
for an extended period.
US Debt CDSs
Credit default swaps on American debt were up about 2% for the day, around half of their peak in early 2009.
Sovereign Debt Ratings
From the WSJ:
A cornerstone of the global financial system was shaken Friday when officials at ratings firm Standard & Poor's said U.S. Treasury debt no longer deserved to be considered among the safest investments in the world.Really? Belgium is still AA+? I find that pretty surprising. I wonder how stale that rating is.
S&P removed for the first time the triple-A rating the U.S. has held for 70 years, saying the budget deal recently brokered in Washington didn't do enough to address the gloomy long-term picture for America's finances. It downgraded U.S. debt to AA+, a score that ranks below Liechtenstein and on par with Belgium and New Zealand.
Wait, what was the headline? Oh, yeah - Belgium isn't the only first-world country with mounting debt and no predictable government.
S&P said "the downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics." It also blamed the weakened "effectiveness, stability, and predictability" of U.S. policy making and political institutions at a time when challenges are mounting.I hear CDSs on US debt have already been going up, and in light of what S&P mentioned, AA or AA+ seems reasonable to me. Which, mind you, is not exactly junk status, or even particularly close, but does acknowledge that the conventional "risk-free" asset is not actually free of risk. It will be interesting to see how (and if) the market reacts to this.
Also, if anyone in Congress or near the top of the executive branch calls for an investigation of S&P and their methods, I'd like to preemptively call for his or her resignation. I know they pull that crap in Italy, but the civilized world doesn't behave that way, and I'd be more concerned about the future of my country if we went down that road than I am concerned about the ratings downgrade or even the issues that precipitated it.