Omair Ali Antonio Alfonso Shehab Chowdhury Mohammad Zubair Ahsan Syed Federal Reserve Open Market Committee Fed Challenge 2011.

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Presentation transcript:

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

Foreclosure activity and Delinquency

Case Shiller Home Price Indexes

Case-Shiller continued

Retail Sales

V. Labor Markets and Productivity  Unemployment rate is stuck at 9.1%  Consumer confidence slipped in October.  Income growth is meager

Unemployment

Under Utilized labor

Pay Roll

Job less

ISm

Industrial Production

Inventory Sales

Durable goods

Non Defense Captial goods

Trade Balance

U.S Dollar Index

Federal Deficit In terms of GDP

Out Put Per Hour

PPI

Capacity

Federal Funds Rate

Commercial Paper

CDS