Omair Ali Antonio Alfonso Shehab Chowdhury Mohammad Zubair Ahsan Syed Federal Reserve Open Market Committee Fed Challenge 2011
AGENDA I. General Comments II. GDP growth trends III. Consumer Sector IV. Housing Market V. Labor Markets and Productivity VI. Inflation VII. Financial Markets VIII. Specific Issues of Concern: Eurozone Worries IX. Policy Action
I. General Comments: U.S. Economic Climate GDP growth has improved Labor market is weak with the unemployment rate stuck at 9.1% Consumers remain cautious – Consumer confidence still low. Business investment picking up. Oil Prices are volatile. Financial market worries dominate. Policy actions – focus on reducing unemployment
II. GDP Growth 3Q 2011 marks ninth consecutive quarter increase in real GDP. 3Q 2011 real GDP growth stepped up to a 2.5% rate from 1.3% in 2Q and 0.4% in 1Q. Growth is up 1.6% compared to a year ago. Strength seen in consumer spending (up 2.4%) and fixed nonresidential investment (up 14%). Final sales grew at a healthy 3.6% rate, but inventories subtracted 1.1% from this to give us 2.5% 3Q growth. Core PCE deflator was up at a 2.4% rate in 3Q, which is high, but better than the 3.3% rate seen in 2Q. Despite 3Q improvement, the GDP gap – the difference between actual and potential GDP is sizeable at 6.7%
Large GDP Gap Overall Assessment: Despite firmer 3Q growth, downside risks remain.
III. Consumer Outlook 3Q 2011 revival in consumer spending but negative signs dominate. Consumer confidence slipped in October. Income growth is meager
IV. Housing Some stabilization seen Consumer confidence slipped in October. Income growth is meager
Mortgage rates
Housing starts
Home Sales and the NAHB Housing Market Index Source: The Dismal Scientist
Foreclosure activity and Delinquency Source: Dismal Scientist
Case Shiller Home Price Indexes Source: The Dismal Scientist
Case-Shiller continued Source: S&P Indices, Press Release, October 25, 2011
V. Labor Markets and Productivity Unemployment rate is stuck at 9.1% Consumer confidence slipped in October. Income growth is meager
Unemployment Source: Bureau of Labor Statistics
Under Employed Labor Source: Bureau of Labor Statistics
Pay Roll Source: Bureau of Labor Statistics
Jobless Claims Source: Bureau of Labor Statistics
ISM Source: Institute of Supply Management
Industrial Production Source: Board of Governors Federal Reserve
Inventory Sales
Durable goods
Non Defense Captial goods Source:
Trade Balance Source: St. Louis Federal reserve
U.S Dollar Index Source: Bloomberg
Federal Deficit In terms of GDP Source: Congressional Budget Office
Out Put Per Hour Source: Bureau of Labor Statistics
PPI Source: Bureau of Labor Statistics
Capacity
Money Supply
Federal Funds Rate
Commercial Paper