Category Archives: Retail Sales

Mastercard shows sales down, but some improvement

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Note the good news is quietly put in at the end as an afterthought:

U.S. retail sales struggle in early November: MasterCard

NEW YORK (Reuters) – U.S. sales of apparel, shoes and appliances fell dramatically in the first two weeks of November, as consumers worried about a recession and job losses further cut spending, MasterCard Advisors said in a report.

The results from SpendingPulse provide an early look into the strength of the crucial U.S. holiday sales season, which traditionally begins on the day after Thanksgiving. This year, the major holiday sales period begins on Friday, November 28.

Analysts are predicting the worst holiday sales season in nearly two decades.

Overall apparel sales are down 19 percent from the same period a year ago, according to a report by SpendingPulse, the retail data service of MasterCard Advisors, an arm of MasterCard Worldwide. Apparel sales fell 5.5 percent in September and 12.2 percent in October.

Women’s apparel fell 19.7 percent in the first half of November compared with last year, with men’s apparel down 20.5 percent.

Footwear sales fell 11 percent, and electronics and appliance sales dropped a steep 22.1 percent, according to the report. Total luxury sales, which includes jewelry and high-end luxury stores, fell 21.1 percent.

Internet sales showed the most modest decline of the period, at 7.5 percent.

SpendingPulse’s report includes sales from November 1 to November 15 and comes on the heels of dismal October sales, as consumers focused on essential purchases as the global financial crisis deepened.

“It’s still very, very challenging. We’ve been seeing a deteriorating retail environment for some time, but in the last 10 days of October things started to deteriorate rapidly. That’s continuing in November,” said Michael McNamara, vice president of SpendingPulse.

Sales were better in the second week of November than the first, as consumers previously distracted by the U.S. election returned to the stores and gasoline prices eased.

“Sales are getting better in relative terms compared to where they had been in October and the first week in November in several categories” such as apparel, McNamara said.


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2008-11-14 USER

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Import Price Index MoM (Oct)

Survey -4.4%
Actual -4.7%
Prior -3.0%
Revised -3.3%

 
Decelerating rapidly!

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Import Price Index YoY (Oct)

Survey 8.2%
Actual 6.7%
Prior 14.5%
Revised 13.6%

 
Decelerating rapidly!

Karim writes:

Price pressures continue to fall sharply:

  • Import prices -4.7% m/m; -0.9% m/m ex-petroleum; yr/yr slows from 13.6% to 6.7%
  • Prices of industrial supplies -25.1% over past 3mths
  • Import prices from China -0.3% over past 2mths

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Import Price Index ALLX 1 (Oct)

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Import Price Index ALLX 2 (Oct)

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Advance Retail Sales (Oct)

Survey -2.1%
Actual -2.8%
Prior -1.2%
Revised -1.3%

 
This is a severe dropoff!

Karim writes:

Largest ever monthly drop in U.S. retail sales:

  • -2.8% m/m headline, -2.2% ex-autos, -1.5% ex-gas (prior mth headline revised from -1.2% to -1.3%)
  • 3mth annualized rate of change in headline now at -10.9%; yr/yr change -3.3%

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Advance Retail Sales YoY (Oct)

Survey n/a
Actual -4.1%
Prior -1.1%
Revised n/a

 
Looks very bad!

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Advance Retail Sales TABLE 1 (Oct)

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Advance Retail Sales TABLE 2 (Oct)

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Advance Retail Sales TABLE 3 (Oct)

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Retail Sales Less Autos (Oct)

Survey -1.2%
Actual -2.2%
Prior -0.6%
Revised -0.5%

 
Same!

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Business Inventories MoM (Sep)

Survey -0.1%
Actual -0.2%
Prior 0.3%
Revised 0.2%

 
Interesting drop- not recession like at all.

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Business Inventories YoY (Sep)

Survey n/a
Actual 5.5%
Prior 6.3%
Revised n/a


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UK’s Brown on the pound

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Europeans worry a lot more about inflation from falling currencies than the Fed does.

>   
>   On Wed, Nov 12, 2008 at 7:19 AM, Milo wrote:
>   

  • BOE’s King says he has No Desire for ‘Sharp’ Drop in Pound
  • BoE Signals Rate Cuts Needed as Economy Contracts
  • U.K. Jobless Claims Rise 36,500, Most Since 1992
  • Brown signals imminent tax cuts
  • British retail sales fall for 1st time since 2005
  • U.K. Housing Sales Drop to Record Low as Prices Fall, RICS Says
  • U.K. Banks Pared Mortgages 13% After Rate Cut

BOE’s King Says He Has No Desire for ‘Sharp’ Drop in the Pound

The following are comments by BoE policy makers on inflation, economic growth and interest rates. Governor Mervyn King and colleagues made the remarks at a press conference following the central bank’s inflation report.

“Clearly if sterling falls far enough this will be a concern and it will have an impact on inflation. It’s not surprising that it’s fallen in the past year. We started by going into this with a significant trade deficit. We are seeing a rebalancing of the world economy.”

“That can be a helpful part of rebalancing the economy, provided it doesn’t affect our ability to meet the inflation target. It’s something we keep a very careful eye on. We have no wish to see it fall very sharply.”

“We have to accept that some fall back from the level we saw in 2007 is part of the rebalancing. Central bankers are prepared to worry almost every day, and I’m prepared for that.”

Regarding the current value of the pound, the bank’s Chief Economist Charles Bean said:

“That very considerable stimulus from the exchange rate should help to pull the economy out of its slow period.”


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Chain Store Sales

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Doesn’t look as bad as many would expect.

Maybe it’s being supported by lower fuel prices.

TABLE-US chain store sales fell 1.0 pct last week-ICSC

(Reuters) The International Council of Shopping Centers and Goldman Sachs on Tuesday released the following seasonally adjusted weekly data on U.S. chain store retail sales.
 

WEEK ENDING INDEX 1977=100 YEAR/YEAR CHANGE WEEKLY CHANGE
(percent) (percent)
Nov 8 477.2 0.4 -1.0
Nov 1 482.0 0.9 0.6
Oct 25 479.3 1.3 0.5
Oct 18 477.0 0.9 -1.6

 
The ICSC weekly U.S. retail chain store sales index is a joint publication between ICSC and Goldman Sachs Group Inc. It measures nominal same-store sales, excluding restaurant and vehicle demand, and represents about 75 retail chain stores.


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2008-10-15 USER

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MBA Mortgage Applications (Oct 10)

Survey n/a
Actual 5.1%
Prior 2.2%
Revised n/a

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MBA Purchasing Applications (Oct 10)

Survey n/a
Actual 313.50
Prior 314.50
Revised n/a

 
Down a tad, but the lower band of the range holding.

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MBA Refinancing Applications (Oct 10)

Survey n/a
Actual 1514.20
Prior 1345.80
Revised n/a

 
Refi machine seems to be functioning.

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MBA TABLE 1 (Oct 10)

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MBA TABLE 2 (Oct 10)

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MBA TABLE 3 (Oct 10)

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MBA TABLE 4 (Oct 10)

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Empire State Manufacturing Survey (Oct)

Survey -10.0
Actual -24.6
Prior -7.4
Revised n/a

 
Much lower than expected as the world economy slows.

Karim says:

  • Drops from -7.4 to record low of -24.6.

  • Orders drop 25 points, shipments drop 9 points, workweek drops 4 points.

  • Employment modest improvement from -4.6 to -3.7

  • Bulk of labor force adjustment seems to be in hours.

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Empire State Manufacturing Survey ALLX 1 (Oct)

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Empire State Manufacturing Survey ALLX 2 (Oct)

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Producer Price Index MoM (Sep)

Survey -0.4%
Actual -0.4%
Prior -0.9%
Revised n/a

 
As expected.

Karim says:

  • Headline -0.4% and core +0.4%

  • Intermediate stage -1.2% and core -0.3%

  • Crude stage -7.9% and core -9.4%

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PPI Ex Food and Energy MoM (Sep)

Survey 0.2%
Actual 0.4%
Prior 0.2%
Revised n/a

 
Higher than expected.

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Producer Price Index YoY (Sep)

Survey 8.6%
Actual 8.7%
Prior 9.6%
Revised n/a

 
Still up big year over year.

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PPI Ex Food and Energy YoY (Sep)

Survey 3.8%
Actual 4.0%
Prior 3.6%
Revised n/a

 
This is breaking out as well.

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Advance Retail Sales MoM (Sep)

Survey -0.7%
Actual -1.2%
Prior -0.3%
Revised -0.4%

 
Lowe than expected partly due to lower gasoline prices.

Karim says:

  • -1.2% m/m and -0.6% m/m ex-autos; modest downward revisions to back months.

  • -1.3% ex-gas.

  • All you need to know is only 2 components to rise m/m were health care and gasoline!

  • Furniture and clothing were each down 2.3%; the drop in furniture the most since Feb 2003.

  • And this before the 15% month to date decline in equities in October.

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Advance Retail Sales YoY (Sep)

Survey n/a
Actual -1.0%
Prior 1.5%
Revised n/a

 
Looking like recession levels.

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Retail Sales Less Autos MoM (Sep)

Survey -0.2%
Actual -0.6%
Prior -0.7%
Revised -0.9%

 
Also, lower than expected.

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Advance Retail Sales TABLE 1 (Sep)

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Advance Retail Sales TABLE 2 (Sep)

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Advance Retail Sales TABLE 3 (Sep)

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Business Inventories MoM (Aug)

Survey 0.5%
Actual 0.3%
Prior 1.1%
Revised n/a

 
A little lower than expected.

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Business Inventories YoY (Aug)

Survey n/a
Actual 6.4%
Prior 6.5%
Revised n/a

 
Working their way higher but not out of control.


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2008-10-06 China News Highlights

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Looks like our loss is going to be their gain due to our leaders being in this way over their heads.

Highlights

Premier: China’s steady growth can help
China May Move to Revive Sagging Property Market, JPMorgan Says
China May Maintain Fast Growth Amid Crisis, Premier Wen Says
China Should Prepare for Dollar Fall, Securities Journal Says
UBS Cuts Economic Growth Forecast for Asia, China
China’s Retail Sales Rise During Week Holiday, China Daily Says

Premier: China’s steady growth can help

Oct 6. (China Daily) Maintaining “steady and fast” growth is the largest contribution China can make to help the world overcome the current financial crisis stemming from the United States, Premier Wen Jiabao said Sunday.

“It will be the biggest contribution to the world for a huge country with 1.3 billion people to maintain steady and fast growth in the long term,” Wen said during an inspection to the Guangxi Zhuang autonomous region.


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2008-09-12 USER

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Producer Price Index MoM (Aug)

Survey -0.5%
Actual -0.9%
Prior 1.2%
Revised n/a

 
A welcome drop for the Fed but only wipes out part of last month’s gain.

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PPI Ex Food and Energy MoM (Aug)

Survey 0.2%
Actual 0.2%
Prior 0.7%
Revised n/a

 
Again, moderating a bit, but the two month average is still very high.

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Producer Price Index YoY (Aug)

Survey 10.2%
Actual 9.6%
Prior 9.8%
Revised n/a

 
Still sky high.

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PPI Ex Food and Energy YoY (Aug)

Survey 3.7%
Actual 3.6%
Prior 3.5%
Revised n/a

 
Less than expected but still too high.

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Advanced Retail Sales MoM (Aug)

Survey 0.2%
Actual -0.3%
Prior -0.1%
Revised -0.5%

 
Weaker than expected and previous month revised lower as well.

A large drop in gasoline sales due to falling prices was a factor. Ex gasoline sales retail sales were flat.

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Advanced Retail Sales YoY (Aug)

Survey n/a
Actual 1.6%
Prior 2.1%
Revised n/a

 
While muddling through with modest increases, the drift looks lower.

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Retail Sales Less Autos MoM (Aug)

Survey -0.2%
Actual -0.7%
Prior 0.4%
Revised 0.3%

 
Lower than expected and more than reverses last month.

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Business Inventories (Jul)

Survey 0.5%
Actual 1.1%
Prior 0.7%
Revised 0.8%

 
Higher than expected. Question is whether this is in response to higher sales or unwanted due to lower sales.

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Business Inventories YoY (Jul)

Survey n/a
Actual 6.4%
Prior 5.7%
Revised n/a

 
Inventory levels look reasonable here.

Karim writes:

  • Gas prices showing their importance

  • Confidence rises from 63 to 73.1 (though level still quite low historically)

  • 1yr fwd inflation expex fall from 4.8% to 3.6%

  • 5-10yr fwd inflation expex fall from 3.2% to 2.9% (back in the range)


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2008-08-13 US Economic Releases

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MBA Mortgage Applications (Aug 8)

Survey n/a
Actual -1.5%
Prior 2.8%
Revised n/a

Muddling through on the low side as mortgage bankers lose market share to banks.

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MBA Purchasing Index (Aug 8)

Survey n/a
Actual 315.2
Prior 315.2
Revised n/a

Flat at low levels.

May do better as the seasonal adjustments get easier.

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MBA Refinancing Index (Aug 8)

Survey n/a
Actual 1074.6
Prior 1121.8
Revised n/a

Slowing, as bulk of resets are past and rates are doing nothing.

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MBA ALLX 1 (Aug 8)

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MBA ALLX 2 (Aug 8)

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Bloomberg Global Confidence (Aug)

Survey n/a
Actual 14.10
Prior 10.30
Revised n/a

Low, but improving.

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Import Price Index MoM (Jul)

Survey 1.0%
Actual 1.7%
Prior 2.6%
Revised 2.9%

Scary stuff if you are responsible for the value of the currency.

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Import Price Index YoY (Jul)

Survey 20.4%
Actual 21.6%
Prior 20.5%
Revised 21.1%

‘Inflation’ flooding in through the open window.

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Import Price Index ALLX 1 (Jul)

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Import Price Index ALLX 2 (Jul)

Karim writes:

Import prices continue uptrend

  • Headline +1.7% m/m; ex-petroleum up 0.9% m/m

Yes and ex petro 8% year over year and still rising. And this takes time to pass through to core CPI.

  • Expect headline to be below core for the next few mths though

Yes, if gasoline stays down.

But rental vacancies took a small turn down, and owner equivalent rent already printed a 0.3%, and seems with starts so far down there has to be a shortage of actual units available to live in. Also, lots of catching up to do in other core measures, like medical and others which had some prints on the low side.

All of their costs are rising and push up prices with various lags.

And Russia has demonstrated they can do whatever they want and there’s nothing anyone can do about it.

Not good…

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Advance Retail Sales MoM (Jul)

Survey -0.1%
Actual -0.1%
Prior 0.1%
Revised 0.3%

Down some as expected due to weak car sales, but prior month revised up.

Sometimes if people don’t buy cars they buy other things…

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Advance Retail Sales YoY (Jul)

Survey n/a
Actual 2.6%
Prior 3.4%
Revised n/a

Still looks to be moving off a bottom.

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Retail Sales Less Autos MoM (Jul)

Survey 0.5%
Actual 0.4%
Prior 0.8%
Revised 0.9%

Looks okay, a tenth below expectations but prior month revised up the same tenth.

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Retail Sales Less Autos YoY (Jul)

Survey n/a
Actual 6.0%
Prior 6.4%
Revised n/a

Looking reasonably firm.

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Advance Retail Sales ALLX (Jul)

On Wed, Aug 13, 2008 at 8:54 AM, Karim writes:

Retail sales generally weak but in line with expectations

  • Headline -0.1% m/m; ex-gas -0.2% m/m; ex-autos +0.4%; control group +0.3%
  • Rebate checks did trickle in through July so some help from there
  • Looks like real PCE off to flat start in Q3, perhaps explaining Fisher’s remark yesterday that ‘we will broach zero growth’ in the second half of the year

The FOMC now has a multi year history of underestimating GDP and inflation.

Seems with Q2 GDP now looking like 3% or more, and the first half therefore averaging maybe over 2%, and year over year gdp still pushing 3%, they would either adjust or downgrade their GDP forecasting model.

Same with their inflation forecasting model, as cpi moves through 5% and core elevates from levels not long ago forecast at not a lot more than half that.

Looking more and more like the real economy did bottom in Q4 2007, as private forecasters are now starting to project positive gdp for Q3 and Q4, and some for Q1 2009 as well.

And even if the saudis keep crude at current levels core cpi should continue to march higher for many more quarters as it all catches up to the shift from $20 crude to $100+ crude.

Yes, the financial sector continues to have issues, may severe, but blood is flowing around the clot as the real economy moves forward.

Housing starts peaked in the early 1970s at 2.6 million with only 215 million people and no secondary market or housing agencies- just a bunch of dumb s and l’s taking in deposits and making mortgages (is used to work at one back then).

Today with 50% more people we call 2 million units gangbusters.

The financial innovation is all predatory at the macro level, though at the micro level we’d grown dependent on it for sure.

Yes, US exports are reducing foreign GDP growth, but their are signs they are moving to support domestic demand with fiscal measures, including Japan, the UK, and even some talk from the eurozone, and even china announced lower inflation numbers to justify supporting growth.

And Saudi crude output shows no sign of world net supply going up. Current price action just some kind of massive ‘inventory adjustment’.

Yes, that can change but hasn’t yet.

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Business Inventories MoM (Jun)

Survey 0.5%
Actual 0.7%
Prior 0.3%
Revised 0.4%

3% Q2 GDP means more inventory is needed.

Also, this and previous inventory data for June higher than expected which means Q2 might be revised up that much more as very low inventory levels were estimated with the initial 1.9% release for Q2 GDP.

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Business Inventories YoY (Jun)

Survey n/a
Actual 5.6%
Prior 5.3%
Revised n/a

Not the usual recession pattern.

The real sector seems well managed.

The financial sector is another story. They don’t count mbs inventory, for example, in this series…

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Business Inventories TABLE 1 (Jun)

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Business Inventories TABLE 2 (Jun)


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TimesOnline: Latest on BoE rate setting

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The mainstream view remains the cost of a near term recession in order to bring prices under control now is far less than the cost of a recession later if you support growth now and let prices continue higher.

Bank of England holds interest rate at 5%

by Gary Duncan, Grainne Gilmore

The Bank of England rebuffed mounting concerns over the rapidly weakening economy today and held interest rates at 5 per cent as it pursued its drive to quell soaring inflation.

The tough verdict from the Bank’s rate-setting Monetary Policy Committee (MPC) brushed aside pleas from business leaders and trade unions for a cut in base rates to shore up Britain’s growth, amid growing fears that the country is on the brink of recession.

The Bank’s decision came after headline consumer price inflation leapt to a 10-year high of 3.8 per cent in June, well above the Bank’s 2 per cent target, and amid expectations that it could hit 5 per cent over the summer, following swingeing increases in household gas and electricity bills imposed by utility companies.

The MPC had been widely expected to spurn pressure for a rate cut today in a bid to make clear its determination to bring inflation back to the target set by the Chancellor. The committee will almost certainly have discussed raising rates this morning, as it did last month, when Professor Tim Besley, voted for an immediate increase. He is expected to have done so again today, and may have been joined by other hawkish MPC members.

The Bank will set out its thinking more clearly next week when it publishes its latest forecasts for the economy in its quarterly Inflation Report. That is expected to emphasise the dilemma that the MPC confronts, with inflation set to soar far above target in the next few months, even as the economy slides towards a severe downturn.

The quandary facing the Bank was underlined yesterday as the International Monetary Fund sharply cut its forecasts for Britain’s growth this year and next, while issuing a warning that it saw “little scope” for interest rates to fall, although it also saw no need for an immediate rate rise.

Today’s no-change verdict by the MPC came despite bleak economic news in recent days, which have produced danger signs of recession.

Concern that Britain’s growth had ground to a virtual halt last month, and could even be in the grip of recession, were inflamed this week after bleak figures revealed growing frailty in the most critical parts of the economy.

These included shrinking activity in the services sector, the economy’s engine room that account for three quarters of the UK’s output, as well as in manufacturing.

The services sector, spanning businesses from cafes and leisure centres to accountancy and law firms, shrank for a third month in succession last month, according to the latest purchasing managers’ survey, regarded by the Bank as a key gauge of economic conditions.

Although services activity edged up from a seven-year low that was plumbed in June, the survey pointed to an even sharper slowdown ahead, with levels of outstanding business for the sector’s companies falling for a tenth month in a row, and inflows of new business dropping to a record low.

At the same time, it emerged that manufacturing is suffering its first sustained run of decline since 2001, after its output fell in June for a fourth month in a row, dropping by 0.5 per cent.

The figures were among the latest data confirming the dire plight of the economy, and came after official confirmation that the pace of Britain’s overall growth slowed to just 0.2 per cent in the second quarter, its weakest rate of expansion for three years.

The falling housing market remains a key source of economic anxiety, with the Nationwide Building Society reporting that house prices tumbled by a further 1.7 per cent last month, leaving them down 8.1 per cent on last year – their sharpest annual pace of decline since 1991.

The high street is also being badly hit by the downturn, with official figures showing that retail sales plunged by 3.9 per cent in June – their biggest monthly drop for 22 years.

Yesterday, the International Monetary Fund added to the mood of pessimism as it cut its forecast for Britain’s growth this year and next to only 1.4 per cent, and 1.1 per cent, respectively. The prediction of the UK’s worst performance since the end of the last recession raised the spectre of two years of economic misery.

In May, Mervyn King, Governor of the Bank, was forced to write an explanatory letter to the Chancellor, required by law, explaining why inflation had risen more than 1 point above its 2 per cent target, after it climbed to its then-high of 3.3 per cent. Mr King has admitted that he expects to write more such letters this year.

The Bank’s inflation headache has been further aggravated by signs of further severe price pressures in the pipeline to the consumer, Manufacturers’ costs rose at a record 30 per cent annual rate in June, and prices for goods leaving factories rose by a record 10 per cent. Inflation is being stoked by a sharp slide in the pound, by about 12 per cent over the past year, which lifts Britain’s bills for imported products.

However, there has been some let up in international food and energy costs, with oil prices tumbling by 13 per cent in a month, and prices for food products are also on the slide.

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2008-08-05 US Economic Releases

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ICSC-UBS Store Sales WoW (Aug 5)

Survey n/a
Actual 0.0%
Prior 1.2%
Revised n/a

Flat, but year over year still looking ok.

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ICSC-UBS Store Sales YoY (Aug 5)

Survey n/a
Actual 2.9%
Prior 2.6%
Revised n/a

Continues higher into today’s meeting.

By itself, generally not an important number for the Fed.

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Redbook Store Sales Weekly YoY (Aug 5)

Survey n/a
Actual 3.5%
Prior 2.9%
Revised n/a

Also moving up, even after rebates have gone out.

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ICSC-UBS Redbook Comparison TABLE (Aug 5)

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ISM Non-Manufacturing Composite (Jul)

Survey 48.8
Actual 49.5
Prior 48.2
Revised n/a

Better than expected, seems to be holding at muddle through levels.

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ISM Non-Manufacturing Composite ALLX 1 (Jul)

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ISM Non-Manufacturing Composite ALLX 2 (Jul)


Karim writes:

  • Employment up, export orders and prices paid down were largest movers. Number is for July, so employment number doesn’t seem consistent with NFP data for same month.
  • Export orders do seem consistent with recent data out of Europe and Japan (Eurozone retail sales for June that came out today showed down 3.1% y/y).

    • “Our business remains at about the same level as the previous month, with continued focus on cost reduction.” (Finance & Insurance)

    “The general state of the home-building industry has not changed since last month; however, with the commodity and code changes going into 2009, we face much higher construction costs and reduced margins across the entire supply chain.” (Construction)

    Right, prices to rise even as volumes remain low, as headline leaks into core via cost push.

    “Continue to see slowdown in local economy.” (Health Care & Social Assistance)

    “While still positive, the overall outlook for 2008 for our company is not as high as earlier in the year.” (Wholesale Trade)

    “Governmental spending for services is up this period.” (Professional, Scientific & Technical Services)

    Yes, government deficit spending on the rise.

    July June
    2008 2008
    Index 49.5 48.2

    While below 50, this still implies positive GDP growth and is not collapsing as feared.

    Activity 49.6 49.9
    Prices Paid 80.8 84.5

    Still way high.

    New Orders 47.9 48.6
    Employment 47.1 43.8

    Agreed – not in sync with other employment indicators, but the other numbers reflect large numbers of new entrants to the labor market – a higher labor force participation rate.

    So these companies maybe planning employment increases, but falling short of those new people now reported to be looking for work

    Export Orders 47.5 52.0
    Imports 49.0 50.5

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    FOMC Rate Decision (Aug 5)

    Survey 2.00%
    Actual 2.00%
    Prior 2.00%
    Revised 2.00%

    Fisher voting to hike, and others placated by stronger anti-inflation rhetoric.

    History will not be kind to this Fed.


    Karim writes:

    • Bland statement-1 dissent (Fisher)
    • Dovish-
        <
      • Economic activity ‘expanded’ in the 2nd qtr (no mention of ongoing expansion)
      • Labor markets have softened further and markets remain under considerable stress
      • No mention that downside risks to growth have diminished (as they did last time)

    Hawkish-Upside risks to inflation are also of ‘significant’ concern (new)

    Bottom Line: No guidance of anything imminent (i.e., Sep move is off the table). October 29 meeting is 1 week before election and Nov payrolls report, so December meeting earliest likely to see a move, if any.

    NEW

    Economic activity expanded in the second quarter, partly reflecting growth in consumer spending and exports. However, labor markets have softened further and financial markets remain under considerable stress. Tight credit conditions, the ongoing housing contraction, and elevated energy prices are likely to weigh on economic growth over the next few quarters. Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth.

    Inflation has been high, spurred by the earlier increases in the prices of energy and some other commodities, and some indicators of inflation expectations have been elevated. The Committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain.

    Although downside risks to growth remain, the upside risks to inflation are also of significant concern to the Committee. The Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.

    OLD

    Recent information indicates that overall economic activity continues to expand, partly reflecting some firming in household spending. However, labor markets have softened further and financial markets remain under considerable stress. Tight credit conditions, the ongoing housing contraction, and the rise in energy prices are likely to weigh on economic growth over the next few quarters.

    The Committee expects inflation to moderate later this year and next year. However, in light of the continued increases in the prices of energy and some other commodities and the elevated state of some indicators of inflation expectations, uncertainty about the inflation outlook remains high.

    The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time. Although downside risks to growth remain, they appear to have diminished somewhat, and the upside risks to inflation and inflation expectations have increased. The Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.


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