What the Federal Reserve is Saying and NOT Saying About Our Economy

Here is a lay summary of the Federal Reserve Banks Quarterly Report:

New orders for durable goods fell slightly, as did new housing starts and home sales, but housing prices rose slightly.  Industrial production went unchanged for the quarter. Our consumer attitude also drooped slightly.  Perhaps this is related to higher gasoline prices (up 23%) and higher food prices (up 1.9%).  The overall inflation rate, based on this past quarter, stands at 3.5%.  Exclude food and gasoline and it is still up 2.2%.  Total consumer credit rose for the sixth consecutive month (up 4.3%) which the Federal Reserve bank things is a good thing. 

US quarterly Gross Domestic Product (GDP) remained in positive territory (2.2%) but was lower than expected (i.e.: 2.9%).  However, consumption grew from 2.1% last quarter to 2.9%. This growth was in both durable goods and in services.  Additionally, residential investments grew 19.1% after growing 11.6% in the prior quarter.

The weaker parts of the Fed report centered on business fixed investment and government expenditures. Business investment fell 2.1%, dropping in both investment in business structures (12.0%) and declines in equipment and software growth (up only 1.7% its lowest in ten quarters).

Federal defense spending and investment continued the fourth quarter’s decline, dropping 8.1 percent.  Non-defense spending and investment reversed course from its 4.5 percent fourth-quarter growth rate. Combined with state and local spending, government expenditures reduced real GDP by 0.6 percentage points.

For additional information go to the Federal Reserve Website.

NOTE:  Missing from the Federal Reserve’s Quarterly Reports are all references to changes in wealth or income distribution within the United States.