Celebrate (maybe)! Fed says economy has likely turned a corner
Filed under: Economy
Federal Reserve officials last month felt optimism about the U.S. economy and expressed belief that a nearly two-year-long recession was drawing to close. Still, the group suggested that the U.S. remains vulnerable to shocks, according to minutes from the August 11-12 meeting released Wednesday. A number of factors led the Federal Open Market Committee to conclude that the recession is nearing an end. The FOMC noted that reports suggested economic activity was stabilizing, that the pace of job cuts slowing "noticeably in recent months," and that car production and housing activity had picked up.
Most officials nonetheless expect the economy to recover slowly during the remainder of the year, as consumers still face challenges and consider purchases carefully, according to the minutes. Many FOMC members noted that "households still faced considerable headwinds, including reduced wealth, tight credit, high levels of debt and uncertain job prospects," the minutes said.
With such factors at work, the group concluded that consumer spending would be limited to no more than moderate growth and questioned whether tight credit markets would continue to lead consumers to save, following a trend in recent quarters.
Fed officials were "less worried that they were too optimistic about a second half recovery," said Bill Hampel, chief economist at Credit Union National Association. Hampel told MarketWatch it was likely that the recovery "will not be too much to write home about," given the high debt-burden facing consumers.
One outcome of the meeting was the Fed's decision to stand firm on interest rates, maintaining them at 0 to one-fourth of a percent. The group noted that economic conditions are likely to warrant "exceptionally low levels of the federal funds rate for an extended period of time."
Fed officials said they expected the pace of recovery to pick up next year, even as those views were tempered by concern about household spending. The minutes showed that the Fed's stance on inflation remained unchanged from that of the June meeting, when views of an economic rebound were far less certain.
Still, the group concluded that although "the underlying pace of core inflation seemed to be running a little higher than ... anticipated, survey measures of inflation expectations showed no significant change."
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Reader Comments (Page 1 of 2)
9-02-2009 @ 5:48PM
Cathy said...
we won't turn the corner until Congress:
funds medicare
funds social security
puts the dollar back on the gold standard
stops deficit spending
pays off the national debt
gets out of the banking business
audits The Fed
gets out of the car business
they should keep their hands off health care.
Congress and the Unions are running amok with power and deficit spending and it's just plain wrong! and we, voters and taxpayers, have to take their power away. they work for us!
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9-03-2009 @ 7:18AM
cabo79 said...
The only way to end this BS is to go to term limits. You cannot have a Free Society without rules, laws, a police force to catch the bad guys and prisons to put them in. The same goes for a Free Market capitalist society, you have to have rules, regulations, a police force and prisons to put the bad guys in. Our government is not maintaining a Free Market. Too many political contributions (pay-offs), it is obvious laws are bought and sold. Folks we need to correct this, it happens over and over. Our government is paralyzed by the need for pay-offs (political contributions). We need a major change to end this professional politician form of government. We need TERM LIMITS and real campaign finance reform. How about three 4 year terms for Congressmen, two 6 year terms for Senators and keep the current limit of two 4 year terms for President. The most anyone may serve in the Congress and Senate combined would be 14 years. We need an end to the professional politician form of government.
9-02-2009 @ 7:14PM
jim said...
Im with Cathy!!!!!!!!!!
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9-02-2009 @ 7:49PM
russ said...
this is just more hot air. things maybe better for the ones with big money, but the everyday person and retiree has taken a big hit in the pocket. people can not buy if the need all ther money to have a home and food. time to wake up!!!
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9-02-2009 @ 8:33PM
Joseph Shedlock said...
Why is that less than a year ago, the same IDIOTS that are on the Fed Board denied that a recession even existed?
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9-02-2009 @ 9:52PM
David Rockefller 111 said...
Just got off the phone with my congressman R-Kline from Minnesota and we're SCREWED! First off the third largest item in our national budget is paying interest on the national debt. Now they are balooning that out umtold trillions more and with the unfunded liabities like Medicare and social security we are facing over a100 TRILLION black hole while the country loses money by the bushel every damn day. How are we going to pay off 100 trillion plus we don't have? Who will lend us that kind of dough? No way, no how so the dollar is toast, we are facing massive inflation, massive social problems, massive deficits, debts, and Washington just sucks the graft from the 34,000 "lobbyists" and the CEO's line their pockets selling us out before the poop hits the fan. I'll tell you, own some gold, silver, plant gardens, store dry food, own a gun and ammo, don't listen to the hype about that "flu" or get a vaccine, don't listen to anything from the main media or Washington, or Wall St. think for yourselves and get a plan up! America has been sold down the river by the globalist banksters and the end will mean we hit the wall at some point hard. Don't end up a spattered blob on it, don't follow the lemmings over the cliff, folow the markets on charts and play along with the ghouls up and down and own real commodities, gold, guns. silver, oil, copper, water, agriculture, and buy when they drop. Gangster banksters really did us in this time! Thanks David Rockefeller you nasty old SOB. Creep.
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9-02-2009 @ 11:00PM
Iridium said...
What scares me is the value of the Dollar vs Asian currencies. We might fall under 90 Yen per Dollar in the next few days.
The issues we are having are all based on the lack of middle class income. The average person just doesn't have any money. The picture is far bleaker for anyone under the age of 35. Young familes are just screwed in every aspect.
Although housing has fallen from the 2006 highs, nearly every area is still well above the levels of the 1990s. Food and energy is sky high compared to ten years ago and high income career propects are non existant.
If you are a young person you have three career choices; health care, banking and finance, and government. All three choices are negative income generators. All three must take money out of the system in order to create income for the employed, they are consumption based and do not produce anything of net value.
The only positive growth sectors are raw material acumulation and manufacturing. Taking something out of the ground and turning it into something of value. Without creating something of value you must find some other source of revenue in order to purchase goods. In the United States that revenue source was debt.
The growth of the past 30 years has been financed through debt. We are currently reaching the endgame of that pursuit. The point that the repayment of debt surpasses the level of income that can be generated. We are in essence bankrupt. In order to keep the economic machine going the US government generated unprecedented debt.
SO much false money that they were able to create a supposed economic recovery by funneling huge ammounts of currency into the stock market through the investment banks. The money doesn't really exist because there was no growth engine to finance it. The revenue didn't come through taxation or from rising asset values. Individuals did not invest a few trillion in the stock market. The DOW's rise from 10,000 to 14,000 was finacned through the bogus run up in property values. Value that did not exist.
At least the last bubble had some sort of cover story. This one is just the plain and simple fact of the government creating value out of thin air.
SO the government can applaud itself all it wants. It manufactured an economic recovery through the massive expansion of debt. It inflated the money supply to fill the gap left by the multi-trillion dollar housing collapse.
This type of action would normally have dire consequences but they have not shown up yet. I believe this is because the world economy still hinges on every move the US economy makes. You can bet that every other country is trying to figure out ways to break that link. When they do the US economy will fall to a point that will make Somalia look like Dubai.
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9-03-2009 @ 2:55AM
GeorgeSD said...
you have to be alive to spend it
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9-03-2009 @ 4:35AM
vern said...
Our dollar is worth 75 cents. Inflation is coming and we are retired on a fixed income. No raises for us. The government went on a spending spree bailing all big companies and banks out, but they forgot about the american people. No one bailed us out. What I had in stocks from having worked over 30 years was the supplement to my retirment. I lost over half of that. We are stuck, but with the fixed income we have there is no overspending. We buy just what we need. We are too old to go back to work.
I am with Cathy.
The ceo's lined their pockets with our money big bonuses, in the millions. Even after they were bailed out. They took big vacations, played gold, the bar bills were high, great food and great entertainment on our tax dollars and we were totally left out of our money by the government. Now, government has gotten bigger so our tax dollars go to pay big bucks to those in congress. We need to vote them out. Millions without work how do they want americans to spend if there are no jobs, no money. Many are living off non-employment checks and when that goes, then what? Their checks are not much, some get 8 hundred dollars a month. What can anyone buy with that amount of money monthly? I would like to see Obama and Congressmen live off the little amount that we get. Vote them out, they work for us.
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9-03-2009 @ 7:28AM
cabo79 said...
Russ is right we have at least 3 more years of this to go. Most of us bought into the stock market "great investment" BS and we are a third to half poorer now. I buy only what I have to. A larger portion of people will be retired soon. One third will live on SS alone, another third will live on SS and a thousand or less a month additional. Most of the rest will have incomes of $4,000 a month or less. No new car in my future.
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9-03-2009 @ 8:41AM
BBOB said...
CATHY BEFORE OBAMA GETS OUT OF OFFICE YOUR DOLLAR WILL BE WORTH 10 CENTS... HOPE YOU CAN STAND IT
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9-03-2009 @ 8:50AM
BBOB said...
WAKE YOU ALL YOU LOST SHEEP !!!! MARCH ON DC SEPT 12. TIME TO TOSS BOTH THE DEMS AND REPUB OUT OF OFFICE... TAKE BACK AMERICA
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9-03-2009 @ 10:39AM
Glenn said...
Has the economy turned the corner: in a word NO !!!
And no matter what kind of BS the Wall Streeters and the Fed regulators try to spin; the AVERAGE American will not think there has been meaningful change until good-paying jobs are being created on a regular basis PERIOD !!!
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9-03-2009 @ 11:27AM
Sonny said...
How can you believe this nonsense........these same people (Bernanke), have said that transparency in then Fed could cause harm in our economic system. They have said that all of their spending, loans, policies must remain secret in order to be effective, so when they do make a statement, you have to consider its truthfulness and accuracy. We as a people and country are simply being lied to and manipulated for the benefit of those at the top.
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9-03-2009 @ 1:12PM
Jim said...
How about a constitutional convention to draft an economic bill of rights?
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9-03-2009 @ 6:57PM
Shut Up Cathy said...
Shut Up Cathy.....your sophomoric vision of what this country needs is pathetic and laughable in it's naivete.
You are a brainwashed sheep who hasn't had an original thought in your life. Can you say "Ba-a-a-h-h-h"
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9-03-2009 @ 7:01PM
Shut Up Cathy said...
Why is it that it takes a woman to post an astoundingly dumb comment???
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9-03-2009 @ 7:06PM
STFU CATHY said...
i'd rather read spam postings than the disingenuous lies posted by stupid, brainwashed, republican broads.
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9-03-2009 @ 7:10PM
STFU BBOB said...
HEY, EINSTEIN BBOB, IT'S A TWO PARTY SYSTEM....IF WE THROW OUT THE DEMS AND THE REPUBS THAT LEAVES US WITH TIN FOIL HAT WEARING BIRTHERS AND PSYCHOS LIKE "RON PAUL". INDEPENDANTS ARE NOTHING MORE THAN RIGHT WINGERS WHO LEFT THE REPUBLICAN PARTY BECAUSE IT WASN'T FASCIST ENOUGH FOR THEM. OH, YEAH, WE WANT THOSE GUYS RUNNING AMERICA!! JUST S-T-F-U!!!
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9-03-2009 @ 9:35PM
joyceches said...
How about a military takeover and let them run it for awhile while you hide under a bush.