Economy Watch: Fed Considers Further Stimulus
- Oct 13, 2010
October 13, 2010
By Dees Stribling, Contributing Editor
Is the Federal Reserve willing to prime the pump again to stimulate the U.S. economy? Economists and other commentators were eager to read the Fed tea leaves on Tuesday with the release of the September Federal Open Market Committee and the Board of Governors of the Federal Reserve System minutes to find out.
The answer seems to be yes. “In light of the considerable uncertainty about the current trajectory for the economy, some members saw merit in accumulating further information before reaching a decision about providing additional monetary stimulus,” the minutes noted in Fed-esse. It sounds mild, but the Fed goes out of its way to sound mild when it’s itching to undertake some serious monetary policy.
As soon as it figures out just how to calibrate that quantitative easing: “In addition, members wanted to consider further the most effective framework for calibrating and communicating any additional steps to provide such stimulus,” the minutes said. “Several members noted that unless the pace of economic recovery strengthened or underlying inflation moved back toward a level consistent with the Committee’s mandate, they would consider it appropriate to take action soon.”
Warren Does Not Call for Moratorium
Consumer czarina Elizabeth Warren weighed in on the robo-signing fiasco on Tuesday during a live on-line chat at WhiteHouse.gov. The job of the government at this juncture, Warren said, is to gather information, not impose a moratorium. She also used the fiasco to make the case that the United States does indeed the new-born Consumer Financial Protection Bureau.
In fact, she asserted, if the bureau has been up and running at the beginning of the real estate crisis, things would have been different–and for the better. “Little problems are a lot easier to fix than great big problems,” he said.
Overall, the response of the Obama administration has been to resist a full-fledged moratorium, and Warren’s comments seemed in line with that. White House spokesman Robert Gibbs told Reuters on Tuesday that a moratorium might have unintended consequences. “We don’t want to see broader harm done to the housing market and to the housing recovery,” he explained.
A New York Kind of Recovery?
A report by ResidentialNYC.com, the public real estate listings web site of the the Real Estate Board of New York, said on Tuesday that the total dollar value for residential property sales during 3Q10 in all five boroughs was up 26 percent to $8.36 billion compared to the third quarter of 2009, and up 11 percent compared to the second quarter of this year.
The number of home sales–which includes cooperatives, condominiums and one- to three-family dwellings–increased citywide by 18 percent compared to last year, with a 25-percent increase in Manhattan alone, the report further noted. In addition, the number of home sales citywide increased 12 percent this quarter compared to last quarter.
“New York City’s residential market continued its recovery in the third quarter and exceeded expectations despite the uneven pace of the global and national economic recovery,” said Steven Spinola, REBNY president, in a statement on Tuesday. “Interest rates are historically low and prices have stabilized, so we anticipate that New Yorkers sitting on the housing market fence will… jump into the market.”
Wall Street seemed to get a FOMC small boost on Tuesday, as the Dow Jones Industrial Average gained a modest 10.06 points, or 0.09 percent. The S&P 500 was up 0.38 percent and the Nasdaq advanced 0.65 percent.