Note the Subtle Changes in the FOMC Statement

Last month (September 23) we saw a very small shift in a few of the key areas of the Fed statement. In particular, the wording change that showed that the Fed saw economic activity has picked up following its severe downturn from “leveling out.”

The Fed also had the following changes:

• Businesses were cutting employees at a slower pace
• Monetary polices will support (from contribute) a strengthening of economic growth
• Long-term inflation expectations were stable – from seeing commodity prices rising
• A slowing of the pace of agency mortgage backed securities that will end 1Q 2010 (from 4Q 2009)

Below are the most recent annual forecasts by Fed. It is plain to see how they are off on several of their projections by a country mile.

Click to enlarge:

This month’s statement has changes which are subtle but important to note:

• Conditions in financial markets were roughly unchanged
• Household spending appears to be expanding ( from stabilizing)
• Comments about low rates of resource utilization, subdued inflation trends, and stable inflation expectations
• Reduction of the purchase amount for agency debt

Download the PDF that shows the most recent statements side-by-side with highlights

*Bloomberg Professional provided side-by-side pdf.

Comments

[Cyrus the G...:]

The Fed is a den filled with lying thieves. They have exploited this economy, as well as the global economy as a whole, through its fraudulent "lending". And now, they are trying to stop Ron Paul's audit. Oh boy, only if people really what the Fed is all about...there would be a nothing short of a revolt at midnight.

Nov 04 05:28 PM

[tripleblack:]

[quote] Monetary polices will support (from contribute) a strengthening of economic growth [quote]

This is the only thing demonstrating a really strong shift in philosophy, and though subtle it is potentially important.

"Contribute" would present the idea that monetary policies could CREATE economic growth, whereas "support" is the far more logical idea that it ALLOWS the economy to grow.

One has the government as the source of economic growth, which is of course nonsense, whereas the new statement is the simple reality.

LOL, this is reading a LOT into the changing of a single term, but that is what we have to work with here.

Nov 05 08:14 AM

[woollyB:]

It's quaint the way deflation gets spun into "subdued inflation."

Nov 05 03:32 PM