FOMC minutes: Early returns point to spring rebound in economy


The Fed is examining "several approaches" for tightening monetary policy, but made no decisions on how to proceed, according to the minutes of the FOMC meeting in late April.

Meeting participants blamed the weather on the "sharp slowdown" in the economy in Q1, but recent indications point to a rebound. "Most participants" took note of the continuing weakness in housing.

On inflation, most expect the rate to return to the 2% target within a few years, but a number expressed concern the return to 2% could be "even more gradual."

Comments (41)
  • JasonC8847
    , contributor
    Comments (373) | Send Message
     
    According to the FED, low rates for a prolonged period of time will have consequences, but we're doing it anyways.

     

    These people are nuts.
    21 May 2014, 02:12 PM Reply Like
  • Philip Marlowe
    , contributor
    Comments (1601) | Send Message
     
    They are completely sane and logical. Inflation is well contained. Unemployment and labor participation are still worse than desirable. It is obvious that while the economy is continuing to slowly improve it still operating well below capacity. Low rates make sense.

     

    Yeah perhaps there will be some negative consequences of keeping rates low for a long period of time. But there will be much worse consequences if we raise rates now and throw the country into a deflationary spiral.
    21 May 2014, 02:41 PM Reply Like
  • JasonC8847
    , contributor
    Comments (373) | Send Message
     
    Like I said Phil, nuts.

     

    And what percent of the population is on welfare, food stamps, unemployment and dissability?

     

    Take that number and put it up against the employment participation rate and you will see the reality of what we truly live in. This will show that the curret reported participation rate is even worse than they say and the unemployment rate is really north of 20 percent.

     

    It's simple math, not pots of gold at the end of rainbows as you suggest the FED capable of.
    21 May 2014, 03:22 PM Reply Like
  • Philip Marlowe
    , contributor
    Comments (1601) | Send Message
     
    Huh? If you are right that unemployment and labor participation is even worse than the results show that is even more reason to keep rates low.
    21 May 2014, 03:25 PM Reply Like
  • mtairyinvest@aol.com
    , contributor
    Comments (190) | Send Message
     
    It is a dangerous fantasy for the Fed to believe that they manage the economy. The misallocation of $4 trillion in capital has been costing us plenty and its unintended consequences will cost us far more, I suspect. Get ready.
    21 May 2014, 03:39 PM Reply Like
  • JasonC8847
    , contributor
    Comments (373) | Send Message
     
    Let me help.

     

    Disability: 11 Million people (Check Drudge to verify number)

     

    Food Stamps: 46.2 Million (USDA May 9, 2014)

     

    Unemployment: U6 from Gallop is 16.6% as of April 2014

     

    Welfare: 12.8 Million as of 1 Jan 2014 (dept. of Commerce)
    21 May 2014, 04:11 PM Reply Like
  • James Sands
    , contributor
    Comments (2729) | Send Message
     
    Are any of these people included in multiple sources above, or do they all add up separately?
    21 May 2014, 04:26 PM Reply Like
  • JasonC8847
    , contributor
    Comments (373) | Send Message
     
    There is overlap, and that will have to be taken into account.
    21 May 2014, 04:32 PM Reply Like
  • Jtb06
    , contributor
    Comments (2) | Send Message
     
    They're cunning. Cunning is a better word. We'll be the only fiat currency ever to not fail, if, in fact, we don't. I'd bet that we will.

     

    I'd agree that we'd have massive deflation if rates rise. But you must realize that they are simply kicking the proverbial can down the road, right? This won't end well.
    21 May 2014, 10:12 PM Reply Like
  • Jtb06
    , contributor
    Comments (2) | Send Message
     
    You're not supposed to be able to get both disability and Welfare to my understanding. Same with Unemployment. Food stamps, I believe, are something that one on any of those income programs can get.
    21 May 2014, 10:12 PM Reply Like
  • Moon Kil Woong
    , contributor
    Comments (13559) | Send Message
     
    Sorry to post late. This all may sound logical, but it is not. Keeping rates unusually low throughout the business cycle is a recipe for disaster as any rational economist not manipulated by self interest will tell you. It's not Keynesian. It's self serving behavior that fly's in the face of all capitalist economic theory.

     

    If you want a deflationary spiral keep inflating until a massive downturn and then have no ammunition to lower rates or stimulate. If you want negative consequences and mass unemployment refuse to allow the market to make structural change by artificially stimulating to keep existing inefficiencies in place. Inevitably the inefficiencies will compound just like in the old USSR until collapse. Refusing to see reality gets you nowhere but in a worse predicament always.

     

    Yes low rates make sense in the way ice cream and candy makes a kid shut up. That doesn't mean it's good, right, or healthy. It is decidedly not.

     

    It makes me sick watching people spout rubbish and calling it Keynesian. Read Maynard Keynes. He would never advocate QE or this type of stimulus. It doesn't exist in rational economic theory. It exists as a textbook about selling out your children's future and capitalism for temporary gain and power.
    21 May 2014, 10:43 PM Reply Like
  • Freedoms Truth
    , contributor
    Comments (1085) | Send Message
     
    The myth is that low rates is an economic elixir. More like pushing a rope.
    22 May 2014, 12:09 AM Reply Like
  • JasonC8847
    , contributor
    Comments (373) | Send Message
     
    Phil,

     

    Not more reason but less reason, and less reason (or no reason) is ruling the day so far.

     

    What's coming is coming and no rainbows and pots of gold can stop it.

     

    jack
    22 May 2014, 01:34 AM Reply Like
  • SivBum
    , contributor
    Comments (2770) | Send Message
     
    The Fed missed the Great Recession because they missed the housing bubble. Now they are the sage forecasting inflation and weather before normalizing discount rate ???
    21 May 2014, 02:13 PM Reply Like
  • andrewtoney
    , contributor
    Comments (100) | Send Message
     
    No inflation,no hike in Fed funds rate;no increase in labor force partecipation rate( at 35-year lows),no hike in sight.
    21 May 2014, 02:23 PM Reply Like
  • SivBum
    , contributor
    Comments (2770) | Send Message
     
    andrew,

     

    Before teh boomers turned 19, labor participation rate was steady and in the high 60's. Then they began to enter the work place and LPR rose accordingly. Today, the first boomers are turning 67 years old. They are retiring and no amount of rate easing or QEs will entice them to participate in any labor other than walking around the cruise ship decks.
    21 May 2014, 02:27 PM Reply Like
  • Brian Auty
    , contributor
    Comments (5509) | Send Message
     
    @SivBum - actually they aren't retiring as fast as they could. Many stay working (I personally know many).

     

    Currently 40% of people over 55 still work (this used to be 20%) and this rate has doubled from 2004.

     

    So yes they are retiring, but not as fast as they could. I suspect this rate will continue to grow. It's hard to say how much more it will grow because a lot depends on the economy and their health. Currently just under half of people who could retire don't.

     

    It's still a large demographic shift and will no doubt drive consumption patterns for the next 20 years.
    21 May 2014, 02:47 PM Reply Like
  • SivBum
    , contributor
    Comments (2770) | Send Message
     
    timmies,

     

    I am not talking about over 55 ! I am talking about boomers turning 66 this year at 10,000 daily for the next decade. I hate to say this, old people are often hazardous on the road and in work places. (Disclosure, I am a boomer.)
    21 May 2014, 02:52 PM Reply Like
  • King Rat
    , contributor
    Comments (1846) | Send Message
     
    SivBum, more than a few boomers I know are STILL working because they did not save enough for retirement. In California, rent alone easily can exceed $1500 for a small apartment. When SS pays $2200, you're left with $700 for utilities, medicine, transportation expenses, and if you're lucky, discounted cat food.

     

    Yes, much responsibility is theirs for not saving more while younger, for all their voluntarily consumed "discretionary spending" that should have gone to savings. The media called their life of no savings "patriotic" because their lack of thrift boosted the economy. Now they get to pay the piper's toll for their "patriotism".

     

    Those who can, work. Not because they want to. Believe me, they would love to be walking around cruise ship decks, but they can't. They have to work to put food on the table, so they don't have to take their pills every other day. Working for many baby boomers has become a necessity, not a choice.
    21 May 2014, 02:57 PM Reply Like
  • andrewtoney
    , contributor
    Comments (100) | Send Message
     
    Right on;if so,please change the Bls stats to adjust them to the new situation.
    21 May 2014, 03:00 PM Reply Like
  • SivBum
    , contributor
    Comments (2770) | Send Message
     
    King Rat,

     

    While some, boomers or not, cannot afford to retire but the point is most seniors above 66 are not employable (too slow, too weak, can't see, can't hear, can't lift things, chronically ill, popping pips, forgetful ... ). Yes, they long to remain employed as roofers, carpenters, oil workers, all night coders, number crunchers, fireman, auto mechanics ... would you hire them over a 40 year old?
    21 May 2014, 03:12 PM Reply Like
  • SivBum
    , contributor
    Comments (2770) | Send Message
     
    andrew,

     

    Just search and peruse the historic LPR and you would see near flat rate before 1970 before peaking in 2007-2008 when the first boomer hit 62.
    21 May 2014, 03:15 PM Reply Like
  • SivBum
    , contributor
    Comments (2770) | Send Message
     
    Here is BLS's data on historic LPR since 1948:

     

    http://1.usa.gov/RV69xm
    21 May 2014, 03:32 PM Reply Like
  • carsjam
    , contributor
    Comments (62) | Send Message
     
    A more recent view was just published by the Bank of Canada: Google "Beyond the Unemployment Rate: Assessing Canadian and U.S. Labour Markets Since the Great Recession"
    21 May 2014, 04:00 PM Reply Like
  • SivBum
    , contributor
    Comments (2770) | Send Message
     
    Need data prior to 2007 ... nothing new other than comparing stats of the two nations.
    21 May 2014, 04:29 PM Reply Like
  • Kodi
    , contributor
    Comments (87) | Send Message
     
    As a young boomer, I was taught Aesop's fable about "The ant and the grasshopper." Where the ant worked day and night and saved for tomorrow whilst the grasshopper jumped about and lived day to day without preparing for the future. When the day of reckoning came, the ant had plenty and the grasshopper starved.

     

    I decided a long time ago (in my 20s) to be the ant. It amazes me that so many people in this world can only behave as grasshoppers.
    21 May 2014, 03:48 PM Reply Like
  • MLP Trader
    , contributor
    Comments (1069) | Send Message
     
    Selfish ant. You need to share that money you hoarded with us grasshoppers.

     

    Oh and when your little ants go to bug college. No aid for you! Our little grasshoppers have a need; your little ants don't.
    21 May 2014, 04:38 PM Reply Like
  • Mike Burns
    , contributor
    Comments (47) | Send Message
     
    When forced redistribution of wealth is the norm (or as Obama calls it "spreading it around") then it is foolish to be thrifty and save. You will work hard but someone who worked far less will have the same standard of living.
    21 May 2014, 08:37 PM Reply Like
  • getreal10000
    , contributor
    Comments (250) | Send Message
     
    Things have changed a lot since you were young. We're supposed to care more about climate change than a robust economic climate. In fact, saving money is so 20th century. Success is now measured by how much you claim to support the poor and disenfranchised (whether or not that's actually true), and not by how effectively you support yourself and your family.

     

    And I just heard today my taxes will be bailing out insurance companies, even as they've hiked my premiums this yr. by over 30%. But yay, a spring rebound is here. Hopefully this season proves more durable than that summer of recovery.
    21 May 2014, 09:44 PM Reply Like
  • the6pack
    , contributor
    Comments (21) | Send Message
     
    Don't be so hard on Obama, he doesn't have time for wealth redistribution because he " wakes up every morning laser- focused on creating jobs". And that's why he doesn't know anything about fast and furious, the IRS, Benghazi, VA hospitals and Beyonce ? sp ? I wish he would be laser focused on my liberty !!!!!!
    21 May 2014, 09:53 PM Reply Like
  • berniespear
    , contributor
    Comments (251) | Send Message
     
    Agree. Learned to save at 30 after having nothing thru my 20's. Also amazing how much you can save fast if you really do it.

     

    But yeah, everyone is in debt and living day to day and will be working til they drop. I want to be out by 50
    21 May 2014, 04:07 PM Reply Like
  • 1GreatCFA
    , contributor
    Comments (1362) | Send Message
     
    Oh sure inflation is well contained: if you're a high school flunky living at home with mom and dad covering: food, fuel, utilities and insurance prems. Gimme a break inflation is contained.
    21 May 2014, 04:12 PM Reply Like
  • SivBum
    , contributor
    Comments (2770) | Send Message
     
    As they say: there is no inflation if you don't eat, drive or rent.
    21 May 2014, 04:30 PM Reply Like
  • Raoul Duke
    , contributor
    Comments (2) | Send Message
     
    oh...you forgot...pay taxes...no inflation there...HA!
    21 May 2014, 04:51 PM Reply Like
  • mpatchen
    , contributor
    Comment (1) | Send Message
     
    Thanks for the chart it makes a lot of the rhetoric go away. From what I've seen if someone want to work there are jobs out there and if you're not making enough make extra on the side invest it and eliminate the middle man. the long term unemployed that can't find jobs aren't willing to do what it takes. Yes maybe you need to move or take a less skilled job. Once you have a job, show up to work every day, work like they're paying you to work not surf the internet and lose the entitlement mentality.
    21 May 2014, 05:19 PM Reply Like
  • tiger8896
    , contributor
    Comments (743) | Send Message
     
    Those criticizing the Fed should look at their portfolios when they had to intercede with these massive liquidity injections.

     

    We've recovered and then some, positives for me refinancing my home for less than 4%, paying dirt cheap rates on my home equity line of credit. My portfolio looks great, long live the Fed and Obama for pulling us out of a catastrophe that could have resulted in a depression similar to the 1930's.
    21 May 2014, 05:21 PM Reply Like
  • Freedoms Truth
    , contributor
    Comments (1085) | Send Message
     
    "My portfolio looks great, long live the Fed and Obama for pulling us out of a catastrophe that could have resulted in a depression similar to the 1930's. "

     

    This is stupid and absurd. There never was such a risk, less so with dollar dilution ad infinitum and Obama had nothing to do with it anyway.
    You might as well give the invisible anti-zombie shield above our heads credit for stopping the zombie acopalypse.... it's a myth you say? Well, thats the POINT.
    22 May 2014, 12:12 AM Reply Like
  • David at Imperial Beach
    , contributor
    Comments (4381) | Send Message
     
    "A number of participants suggested that it would be useful to provide additional information regarding how long the Committee would continue its policy of rolling over maturing Treasury securities at auction and reinvesting principal payments on all agency debt and agency mortgage-backed securities in agency mortgage-backed securities."

     

    In other words, the Fed does not plan to reduce its balance sheet when the securities it holds expire. Instead, they plan to reinvest principle payments to maintain the balance sheet at its current level.
    21 May 2014, 07:26 PM Reply Like
  • tjn6175
    , contributor
    Comments (46) | Send Message
     
    Easy to spew generalities amid loosely woven stats, and turn an incredibly complex financial issue into one's politic. Suffice to say that there are now huge excess reserves in the system, that, if unleashed, will spin up inflation like never before. That is Plosser's ticking time bond. Stop paying interest on those reserves, and watch the velocity of money ratchet up with a bank spending spree. Not smart enough to know how that will turn out. I think the economy resets and the cycle starts all over again.
    22 May 2014, 12:44 AM Reply Like
  • America444
    , contributor
    Comments (4) | Send Message
     
    I am a Viet Nam era United States Navy veteran. I served aboard the USS Guadalcanal LPH-7 during the oil crisis of 1973 in the Med. That is what I am most proud of to be an American. We thought at the time that war was eminent.
    22 May 2014, 02:12 AM Reply Like
  • America444
    , contributor
    Comments (4) | Send Message
     
    I love America. As a two term United States Navy veteran, The Federal Reserve is on America's side.
    22 May 2014, 02:12 AM Reply Like
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