March 4, 2010

Beige Book: Economy Continues to Expand at Modest Pace
The economy continued to expand at a modest pace, although snowstorms hampered activity along the East Coast, according to the Federal Reserve’s Beige Book survey of the 12 Fed districts released yesterday. “Nine districts reported that economic activity improved … [and] overall conditions were described as mixed in the Atlanta and St. Louis districts,” the survey said. However, loan demand remained weak, and lending standards remained tight across the country.

“New York, Cleveland, and Kansas City reported decreased demand for most types of loans [and] other districts said loan demand was unchanged but soft,” the survey said. Philadelphia and Richmond reported banks were receiving more inquiries from businesses about loans, and Dallas said contacts were hopeful that loan demand would pick up by the end of the year. Read more. 

March 2, 2010

Consumer Spending, Personal Income Rise in January
Consumer spending increased by 0.5 percent in January after a revised 0.3 percent rise in December, the Commerce Department reported yesterday. It was the fourth consecutive monthly gain. Much of the increased spending was for durable goods, such as autos, furniture, and other long-lasting items. Meanwhile, personal income rose 0.1 percent in January, the seventh monthly increase in a row, but the lowest in four months.

Construction Spending Falls
Construction spending dropped 0.6 percent to $884.1 billion in January, the third straight month it decreased, the Commerce Department said yesterday. Public construction spending decreased 0.7 percent in January following a 0.4 percent drop in December. Construction spending on new homes and apartments jumped 1.3 percent in January after dropping 2.8 percent the previous month.

February 24, 2010

Bernanke to Testify on Economy
Federal Reserve Chairman Ben Bernanke today will present the Fed's semiannual report on monetary policy and the state of the economy during a House Financial Services Committee hearing. Lawmakers are expected to ask Bernanke about the Fed's strategy for eventually pulling back from its near-zero interest rate policy.

February 19, 2010

Federal Reserve Raised Discount Borrowing Rate to 75 Basis Points
In a late afternoon announcement, the Fed increased the discount window borrowing rate from 0.5 percent to 0.75 percent. Traditionally the discount window is 50 bps above the Fed Funds rate, so this move restores the spread back to its traditional size.

In addition, the Board announced that, effective on March 18, the typical maximum maturity for primary credit loans will be shortened to overnight.

Finally, the Board announced that it had raised the minimum bid rate for the Term Auction Facility (TAF) by 0.25 percentage point to 0.5 percent. The final TAF auction will be on March 8, 2010.

This move suggests the Fed is returning to a non-crisis operating mentality stating, “these changes are intended as a further normalization of the Federal Reserve’s lending facilities.”  The full Fed statement can be read at the source link.

10.02.18 (Source: Federal Reserve)

Leading Economic Indicators Rise
The Index of Leading Economic Indicators gained 0.3 percent in January, its 10th straight monthly increase, the New York-based Conference Board reported yesterday. The index, which is meant to project economic activity in the next three to six months, climbed 1.2 percent in December and 1.1 percent in November. "This signals continued economic recovery at least through the spring," Conference Board economist Ken Goldstein said. Read more. 

Producer Price Index Soars in January
The Producer Price Index rose 1.4 percent in January based on double-digit increases in gasoline and home heating oil, the Labor Department reported yesterday. Core prices for finished goods -- which exclude food and energy -- rose 0.3 percent, led by higher prices for light trucks and airplanes.

February 2, 2010

Consumer Spending, Personal Income Rise in December
Consumer spending increased by 0.2 percent in December after a revised 0.7 percent rise in November, the Commerce Department reported yesterday. It was the third consecutive monthly gain. Much of the increased spending was for energy utilities such as electric and natural gas companies, while spending on goods dropped 0.5 percent, officials said.

Meanwhile, personal income rose 0.4 percent in December, the sixth monthly increase in a row. Income growth was spurred by a large, one-time Social Security payment, Commerce Department officials said.

Manufacturing Activity Jumps in January
The Institute for Supply Management said yesterday that its manufacturing activity index rose to 58.4 in January from 54.9 in December. That was the highest reading since August 2004, when the index stood at 58.5. Economists said the replenishing of inventories drove the sector’s gain. A result above 50 signifies growth.

Construction Spending Falls
Construction spending dropped 1.2 percent to $902.5 billion in December, the second straight month it deceased, the Commerce Department said yesterday. Construction spending on new homes and apartments fell by 2.8 percent, the worst downturn since May 2009, officials said. Overall, construction spending fell by a record 12.4 percent in 2009.

February 1, 2010

President to Unveil FY 2011 Budget Proposal Today
President Obama today will unveil his fiscal year 2011 budget proposal that will include his 15-basis-point tax on large banks. Treasury Secretary Timothy Geithner and Office of Management and Budget Director Peter Orszag will spend Tuesday, Wednesday and Thursday on Capitol Hill testifying on the budget proposal during seven separate hearings involving the Senate Budget and Finance Committees, House Ways and Means Committee and House Budget Committee.