The revision, however, stemmed from businesses running down their inventories by $8.5 billion, which means that the nation’s factories may need to ramp up output to meet demand for their products. Revised figures for final sales, which reflect growth excluding inventory fluctuations, remained the same as originally estimated.
Fed plans second stress test for big banks by Neil Irwin
Taking No New Action, Fed Hopes for More Policy Mileage From Clearer Communication by Binyamin Appelbaum
The minutes from the Nov. 1-2 meeting were released.
While the economy remains weak and more than 25 million Americans cannot find full-time work, the Fed has taken only small steps to stimulate the economy since June. And the minutes — actually an extended description of its Nov. 1-2 meeting rather than a transcript — make clear that a broad majority of the 10 voting members of the committee does not support more drastic action at the present time.Emphasis added.
“Participants generally agreed that, even with the positive news received over the intermeeting period, the most probable outcome was a moderate pace of economic growth over the medium run with only a gradual decline in the unemployment rate,” the minutes say.I'd replace "gradual decline" with "glacially slow decline."
The document also notes that events in Europe could undermine the health of the domestic economy.West's Economic Slump Catching Up With Asia
Only one of the committee’s 10 voting members dissented from this logic. Charles L. Evans, president of the Federal Reserve Bank of Chicago, reiterated his public position that the high rate of unemployment required more immediate and forceful action by the central bank. He said the Fed should commit to maintaining low interest rates until unemployment drops below 7 percent.
There is less agreement about proposals to formalize rules for the management of monetary policy. Some Fed members, including its chairman, Ben S. Bernanke, have long favored the idea of formalizing a long-term inflation target of 2 percent. Others, including Mr. Evans, are pushing for temporary targets for unemployment and inflation to clarify the Fed’s near-term objectives.
The committee dismissed the idea of adopting a new benchmark, like a commitment to pursue stimulus until the nation’s economic output recovers from the recession. Such an approach is favored by a vocal chorus of outside economists, but has little support inside the institution, because of concern about the consequences of accepting more rapid inflation.
The verdict was reported in the Fed’s typically understated style: “Participants agreed that it would not be advisable to make such a change under the present circumstances.”
China depends on the U.S. consumer market -Europe has a trade surplus with the U.S. as well. Another way to put is that China depends upon the aggregate demand supplied by the United States.