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08-01-2012, 03:23 PM
Federal Reserve Says U.S. Economy Is Losing Strength, Takes No New Action
By MARTIN CRUTSINGER 08/01/12 02:53 PM ET

WASHINGTON The Federal Reserve said Wednesday that the U.S. economy is losing strength and repeated a pledge to take further steps to stimulate growth if the job market doesn't show sustained improvement.

The Fed took no new action after a two-day policy meeting. But it acknowledged in a statement released after the meeting that economic activity had slowed over the first half of the year. It also said unemployment remains elevated and consumer spending is rising at a somewhat slower pace.

Stocks indexes turned slightly lower after the Fed didn't announce any new measures to stimulate the economy. The Dow Jones industrial average was down 30 points shortly after the Fed's announcement at 2:15 p.m. It was up 20 points immediately before.

The yield on the 10-year Treasury note increased to 1.52 percent after the Fed's statement was released.

The statement was nearly identical to the one issued after the Fed's June meeting, expect for language noting slower growth. The Fed repeated that strains in the global market pose a significant risk to the U.S. economy, the housing market is improving but remains depressed and inflation remains tame.

Policymakers also repeated their plan to hold short-term interest rates at record-low levels until at least late 2014.

Most economists say the Fed could launch another program of buying government bonds and mortgage-backed securities at its September meeting if the economy doesn't show improvement. The goal of the program would be to drive long-term rates, which are already at record lows, even lower.

Economists will eagerly await what Chairman Ben Bernanke's has to say at an annual economic conference later this month in Jackson Hole, Wyo.

"The Fed took no action at this meeting but strongly hinted that there will be further easing action at the next meeting in September," said David Jones, chief economist at DMJ Advisors.


Jones noted that in its pledge to provide further support, the Fed changed the phrasing to say the central bank "will provide additional accommodation as needed to promote a stronger economic recovery." In the previous statement in June, the central bank simply said that it "is prepared" to take further action.

The statement was approved on an 11-1 vote. Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, dissented for a fifth time this year. He objected to the Fed including language in the statement about keeping short-term rates low until late 2014.

U.S. economic growth slowed to an annual rate of just 1.5 percent from April through June, down from a 2 percent pace in the first quarter.

Fed officials have signaled in speeches their concern about job growth and consumer spending. Bernanke told Congress last month that the Fed is prepared to take further action if unemployment stays high.

Worries have also intensified the U.S. economy will fall off a "fiscal cliff" at the end of the year. That's when tax increases and deep spending cuts will take effect unless Congress reaches a budget deal.

Economists also worry that the debt crisis in Europe could intensify. Borrowing costs are too high for many governments, including Spain and Italy, and growth is slowing across the region as the effects of budget-cutting take hold.

Unemployment hit a record 11.2 percent in June for the 17 countries that use the euro currency.

The European Central Bank holds a policy meeting Thursday and expectations are rising that it could try to jolt the region's financial system through bond purchases or other measures.

The U.S. Labor Department releases the July jobs report on Friday. Economists forecast that U.S. employers added 100,000 jobs in July. That would be only slightly better than the 75,000 a month from April through June and still down from a healthy 226,000 average in the first three months of the year. The unemployment rate is expected to stay at 8.2 percent.

The Fed has already pursued two rounds of purchases of Treasury bonds and mortgage-backed securities.

The Fed has also extended a program called Operation Twist. Under this program, the Fed sells short-term Treasurys and buys longer-term Treasurys. The goal is to lower longer-term interest rates.

Even if the Fed launched a third round of bond purchases, few think that further lowering long-term rates would provide much benefit to the U.S. economy. Most businesses and consumers who aren't borrowing now aren't likely to change their minds if rates slipped a bit more.

The yield on the benchmark 10-year Treasury note is already just above its record low of 1.39 percent, which it touched last week. The national average rate for a new-car loan barely tops 3 percent. And the average on a 30-year fixed-rate mortgage fell below 3.5 percent last week for the first time on records dating back 60 years.

Some regional Fed bank presidents have expressed concern that expanding the Fed's investment portfolio beyond its current record $2.9 trillion to try to lower rates more would heighten the risk of high inflation later.

Some analysts have also suggested that the Fed might be reluctant to act aggressively as the November election nears, out of concern it could be seen as affecting the vote.


Awesome, ain't it Buzz????

Raymond Little
08-01-2012, 04:26 PM
QE IX OR QE X???
Forward:barf:

BonMallari
08-01-2012, 06:31 PM
so much for the private sector doing well...:rolleyes: still trying to figure out how the polls can still be this close, guess half the country just doesnt want to open their eyes and realize the fairy tale is over

gmhr1
08-01-2012, 06:40 PM
87% of those polled say this gay marriage platform is going to hurt dems. I just hope the economy gets better before any more of my CDs mature this is pathetic

Franco
08-02-2012, 11:21 AM
so much for the private sector doing well...:rolleyes: still trying to figure out how the polls can still be this close, guess half the country just doesnt want to open their eyes and realize the fairy tale is over

Obama still leads by a huge number with women. That is going to be a very tough demographic for the GOP to win. It is not about Fairy Tales but their rights that they fear for. As Conservative as Louisiana is, Obama is still out-polling Romney with women.

gmhr1
08-02-2012, 11:24 AM
Maybe Marco Rubio will help if chosen, he is likeable. Women think if Romney gets in they will lose their freebies that they get under obamacare not true Romneys plan will take care of them but he needs to come out and tell us these things.

Franco
08-02-2012, 12:47 PM
I don't think Rubio would help Romney outside of Florida. Certainly won't help him with the Mexican and Central American voters that now live here. He needs to focus on key swing states and pick a Paul Ryan or Rob Portman.

A Romney/Rubio ticket would certainly win the beauty contest but until the GOP gets into the 21st Century on social issues, they are vastly limiting their appeal, especially among women. THe GOP already has the south locked up, it is the big states with the big Electoral College that is going to be extremely difficult.

gmhr1
08-02-2012, 01:00 PM
Your right and the press will tear Rubio apart he has a few skeletons in his closet. I just dont think any of the other VPs will bring excitment to his campaign. People relate to a younger more relaxed likeable guy thats why they like Obama he's cool

Cody Covey
08-02-2012, 01:56 PM
If the GOP "comes into the 21st century" as you put it the GOP will lose many more votes than they will gain...

Franco
08-02-2012, 02:50 PM
If the GOP "comes into the 21st century" as you put it the GOP will lose many more votes than they will gain...

I couldn't disagree more. If the GOP loses in November, they will be forced to drop their backwoods social agenda if they want any roll in the future. That's because as time marches on, less and less will buy into their Draconian social agenda. The GOP has already alienated the vast majority of women and minorities. Their only stronghold is the deep south and a few mid-western lightly populated states. At some point, they have to broaden thier appeal or they become extinct.

The fact that the fastest growing political affiliation are Independents followed by Democrats is the handwriting on the wall! The GOP may be closer to having a realistic approach to solving the issues regarding our economy but, they may never get the chance because of where they stand on social issues. In my book, the economy is much more important than the social issues.

gmhr1
08-05-2012, 11:03 AM
If Obama supports would go back and listen to the promises he made in 2008 and than look at where we are today, with nothing but broken promises this election would be over... he can talk the talk he can't walk the walk......He had 4 yrs to get us out he promised, yet he has dug us into such a deep hole I cant believe Romney would even want to try to dig us out...i

Franco
08-05-2012, 11:52 AM
If Obama supports would go back and listen to the promises he made in 2008 and than look at where we are today, with nothing but broken promises this election would be over... he can talk the talk he can't walk the walk......He had 4 yrs to get us out he promised, yet he has dug us into such a deep hole I cant believe Romney would even want to try to dig us out...i

True that Obama has made it worse but the situation he inherited from 8 years of Bush has the entire country in a tailspin. The reality is that neither the Dems or the Repubs are capable of any real reform, hence we will get more of the same.

Those voting for Obama also see his as the lesser of two evils. Both candidates represent intrusive and over-bearing government. Pick your poison.

gmhr1
08-05-2012, 12:04 PM
With picking Romney we have a chance for hope and change with Obama it will be more of the same, probably a lot worse. He's pretty dangerous ever since he learned to wave his rm and sign executive orders. To me it's an easy choice Good vs Evil.

coachmo
08-05-2012, 12:42 PM
Franco the way you throw around words like "backwoods"and Draconian kinda makes you sound like a true libtard!

Franco
08-05-2012, 01:00 PM
Franco the way you throw around words like "backwoods"and Draconian kinda makes you sound like a true libtard!

I consider myself to be a Traditional Conservative and not what the GOP has become! And, like most Traditional Conservatives, the GOP no longer represents us. Today's GOP is "Backwoods" and "Draconian". All one has to do is look at the issues that are most popular with today's Rebulicans just to see how far the party has fallen.

Other than every political candidate parroting what Ron Paul has been saying for years, none of them can take it past a campaign slogan. At least, it looks like tax payers will soon get a look at how the Fed Reserve has been stealing thier money, thanks to RP legislation!. Instead of the GOP being focused on core issues that effect the economy like Monetary Policy, gowing the economy, passing meanful Legislation regarding Wall St and Foreign Policy they are focused on social issues. It is a train wreck waiting to happen!