Fed Still Mum on QE3; Regional Economic Growth Weak; Vehicle Miles Driven Up
- Aug 28, 2012
By Dees Stribling, Contributing Editor
The Fed’s annual symposium at Jackson Hole, Wyo., is later this week, and Fed chairman Ben Bernanke will speak at the event on Friday, which has set off the latest round of speculation about whether the central bank will try to stimulate the economy once again. After all, it was two years ago in the very same setting that Bernanke said that the Federal Open Market Committee “is prepared to provide additional monetary accommodation through unconventional measures if it proves necessary, especially if the outlook were to deteriorate significantly.”
That is, he announced that the Fed was preparing QE2. That round of stimulus, mainly in the form of bond purchases, brought the amount of bonds on the Fed’s books to roughly $3 trillion.
As usual, individual members of the Fed are offering mixed messages about a stimulus. Eric Rosengren, president of the Boston Fed, and Charles Evans, head of the Chicago Fed, have called for additional stimulus since the last FOMC meeting, but St. Louis Fed President James Bullard was less enthusiastic about more stimulus. If there’s no definite call for QE3 in Jackson Hole, word may come from the next FOMC meeting in mid-September.
Fed Branches Report Tepid Regional Economies
Separately, the Dallas Federal Reserve said on Monday that Texas factory activity increased but at a slower pace in August, according to business executives responding to the Texas Manufacturing Outlook Survey. It’s the most recent regional survey by one of the Fed’s branches, all of which have all pointed toward weak regional economic growth in various parts of the country.
The survey’s production index, a key measure of state manufacturing conditions, fell from 12 to 6.4 points, suggesting softer output growth. The general business activity index remained negative but climbed nearly 12 points from -13.2 to -1.6.
On the other hand, employment growth in Texas picked up in August, with the index rising to 14.2, its highest reading in five months. Twenty-four percent of firms reported hiring new workers, while 10 percent reported layoffs. The hours worked index was near zero, meaning little change in workweek length.
Vehicle Miles Driven Edges Up
The U.S. Department of Transportation reported on Monday that travel on all American roads and streets was up by 0.4 percent (1.1 billion vehicle miles) for June 2012 as compared with June 2011. Travel for the month is estimated to be 257.6 billion vehicle miles. The estimate is based on preliminary reports from the state highway agencies, and is one indicator of economic activity nationwide, though population changes and the price of gas also affect the total.
During previous decades, recessions only temporarily slowed the growth of vehicle miles driven. In the wake of the Great Recession, however, total miles has yet to begin much of an increase, mainly trending sideways in the last four years.
Wall Street was treating water on Monday, and ended the day mixed. The Dow Jones Industrial Average was down 33.3 points, or 0.25 percent, while the S&P 500 lost 0.05 percent. The Nasdaq was up 0.11 percent.