omair ali antonio alfonso shehab chowdhury mohammad zubair ahsan syed federal reserve open market...
TRANSCRIPT
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Omair AliAntonio Alfonso
Shehab ChowdhuryMohammad Zubair
Ahsan Syed
Federal Reserve Open Market CommitteeFed Challenge 2011
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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
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I. General Comments: U.S. Economic Climate
p GDP growth has improvedp Labor market is weak with the unemployment rate
stuck at 9.1%p Consumers remain cautious – Consumer confidence
still low.p Business investment picking up.p Oil Prices are volatile.p Financial market worries dominate.p Policy actions – focus on reducing unemployment
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II. GDP Growthp 3Q 2011 marks ninth consecutive quarter increase in real
GDP.p 3Q 2011 real GDP growth stepped up to a 2.5% rate from
1.3% in 2Q and 0.4% in 1Q. p Growth is up 1.6% compared to a year ago.p Strength seen in consumer spending (up 2.4%) and fixed
nonresidential investment (up 14%).p Final sales grew at a healthy 3.6% rate, but inventories
subtracted 1.1% from this to give us 2.5% 3Q growth.p 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.p Despite 3Q improvement, the GDP gap – the difference
between actual and potential GDP is sizeable at 6.7%
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Large GDP Gap
-10
-8
-6
-4
-2
0
2
4
6
7000
8000
9000
10000
11000
12000
13000
14000
15000
90 92 94 96 98 00 02 04 06 08 10
GDP_GAP (% left axis)REAL_GDP (2005 $ bill, right axis)REAL_GDP_POTENTIAL (2005 $ BILL, RIGHT AXIS)
% Real $ BillGDP GAP, Actual Vs. Potential GDP
p Overall Assessment: Despite firmer 3Q growth, downside risks
remain.
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III. Consumer Outlook
p 3Q 2011 revival in consumer spending but negative signs
dominate.p Consumer confidence slipped in October. p Income growth is meager
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IV. Housing
p Some stabilization seenp Consumer confidence slipped in October. p Income growth is meager
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Mortgage rates
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Housing starts
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Home Sales and the NAHB Housing Market Index
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Foreclosure activity and Delinquency
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Case Shiller Home Price Indexes
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Case-Shiller continued
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Retail Sales
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V. Labor Markets and Productivity
p Unemployment rate is stuck at 9.1%p Consumer confidence slipped in October. p Income growth is meager
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Unemployment
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Under Utilized labor
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Pay Roll
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Job less
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ISm
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Industrial Production
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Inventory Sales
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Durable goods
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Non Defense Captial goods
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Trade Balance
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U.S Dollar Index
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Federal Deficit In terms of GDP
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Out Put Per Hour
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PPI
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Capacity
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Federal Funds Rate
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Commercial Paper
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CDS