Dollars and Jens
Tuesday, August 30, 2011
III 07IV 07I 08II 08III 08IV 08I 09II 09III 09IV 09I 10II 10III 10IV 10I 11II 11
Gross domestic product3.01.7-1.81.3-3.7-8.9-6.7-.
Nondurable goods.29.06-.53.35-.89-.92-.15-.
Durable goods.43.19-.84-.23-1.01-2.12.19-.291.39-.
Change in private inventories-.28-.77-.66-.14-.73-1.54-2.66-.58.213.933.10.79.86-1.79.32-.23
Fixed investment-.22-.81-1.36-.80-1.91-4.05-5.09-2.26.13-.
Net exports of goods and services1.552.22.382.00.79-.122.442.21-.59.15-.97-1.94-.681.37-.34.09
Government spending.


Tuesday, August 09, 2011
The FOMC statement, as revised:

Information received since the Federal Open Market Committee met in April June indicates that the economic recovery is continuing at a moderate pace, though somewhat more slowly economic growth so far this year has been considerably slower than the Committee had expected.  Also, recent Indicators suggest a deterioration in overall labor market indicators have been weaker than anticipated conditions 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 temporary   Household 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 has   Inflation picked up in recent months earlier in the year, mainly reflecting higher prices for some commodities and imported goods, as well as the recent supply chain disruptions. However, longer-term  More 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 the  The Committee now expects a somewhat slower pace of recovery to pick up over coming quarters and than it did at the time of the previous meeting and anticipates that the unemployment rate to resume its gradual decline will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Inflation has moved up recently, but the Committee   Moreover, downside risks to the economic outlook have increased. The Committee also anticipates that inflation will subside to settle, 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 anticipate currently 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 and at 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.

The Committee will monitor discussed 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 stability in 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.


Monday, August 08, 2011
US Debt CDSs
Credit default swaps on American debt were up about 2% for the day, around half of their peak in early 2009.

Friday, August 05, 2011
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.

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.
Really? Belgium is still AA+? I find that pretty surprising. I wonder how stale that rating is.

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.

Powered by Blogger