7/26/2004

The Fed

After our discussion about the Fed in class today, I decided to see what they were up to lately. Turns out that they just reported to congress on July 20th. Their report states that the board feels that the economy is in a very positive position right now.

"Although some of the recent data have been on the soft side, the available information on the outlook for the U.S. economy is, on balance, positive. Households are enjoying a generally improving job market, rising real incomes, and greater wealth, all of which are providing them with the confidence and wherewithal to spend."

This statement, along with all the stats they've collected, helps to explain the decision to increase interest rates. Anyway, I thought the report was interesting and worthwhile to read.

The Fed also may have helped create a few new jobs with their report. I hear John Kerry is looking for someone to help with his economic platforms...

3 comments:

Senator Miller said...

I highly recommend reading the link posted in this blog. I found it very interesting to see the graphs and results of how Americans are spending their money, what they're spending it on, how much they're saving and forecasts for the future. I found it particullarly interesting how household spending is on the rise, and the economy seems to be really increasing. A good sign for George W. in this next election.

Lizzie said...

Somebody correct me if I am wrong, but this sounds like an expansionary fiscal policy. My reasoning for this is because expansionary fiscal policy leads to higher interest rates. Higher interest rates attract international capital which will, in turn, cause an appreciation of the country’s currency. If my understanding is correct we are all going to feel richer for a while but in the longrun we will be poorer? Is this really where we are going?

Dr. Tufte said...

I think it is just grand that 3 of you sought this report out and read it.

WRT Lizzie's comment, she is right that expansionary fiscal policy typically raises interest rates. But, what makes this monetary policy is that it is the Fed. that is doing it.