Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Stocks Don’t Care About Trump Impeachment - 17th Oct 19
Currencies Show A Shift to Safety And Maturity – What Does It Mean? - 17th Oct 19
Stock Market Future Projected Cycles - 17th Oct 19
Weekly SPX & Gold Price Cycle Report - 17th Oct 19
What Makes United Markets Capital Different From Other Online Brokers? - 17th Oct 19
Stock Market Dow Long-term Trend Analysis - 16th Oct 19
This Is Not a Money Printing Press - 16th Oct 19
Online Casino Operator LeoVegas is Optimistic about the Future - 16th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - Video - 16th Oct 19
$100 Silver Has Come And Gone - 16th Oct 19
Stock Market Roll Over Risk to New highs in S&P 500 - 16th Oct 19
10 Best Trading Schools and Courses for Students - 16th Oct 19
Dow Stock Market Short-term Trend Analysis - 15th Oct 19
The Many Aligning Signals in Gold - 15th Oct 19
Market Action Suggests Downside in Precious Metals - 15th Oct 19
US Major Stock Market Indexes Retest Critical Price Channel Resistance - 15th Oct 19
“Baghad Jerome” Powell Denies the Fed Is Using Financial Crisis Tools - 15th Oct 19
British Pound GBP Trend Analysis - 14th Oct 19
A Guide to Financing Your Next Car - 14th Oct 19
America's Ruling Class - Underestimating Them & Overestimating Us - 14th Oct 19
Stock Market Range Bound - 14th Oct 19
Gold, Silver Bonds - Inflation in the Offing? - 14th Oct 19
East-West Trade War: Never Take a Knife to a Gunfight - 14th Oct 19
Consider Precious Metals for Insurance First, Profit Second... - 14th Oct 19
Stock Market Dow Elliott Wave Analysis Forecast - 13th Oct 19
The Most Successful IPOs Have This One Thing in Common - 13th Oct 19
Precious Metals & Stock Market VIX Are Set To Launch Dramatically Higher - 13th Oct 19
Discovery Sport EGR Valve Gasket Problems - Land Rover Dealer Fix - 13th Oct 19
Stock Market US Presidential Cycle - Video - 12th Oct 19
Social Security Is Screwing Millennials - 12th Oct 19
Gold Gifts Traders With Another Rotation Below $1500 - 12th Oct 19
US Dollar Index Trend Analysis - 11th Oct 19
China Golden Week Sales Exceed Expectations - 11th Oct 19
Stock Market Short-term Consolidation Does Not change Secular Bullish Trend - 11th Oct 19
The Allure of Upswings in Silver Mining Stocks - 11th Oct 19
US Housing Market 2018-2019 and 2006-2007: Similarities & Differences - 11th Oct 19
Now Is the Time to Load Up on 5G Stocks - 11th Oct 19
Why the Law Can’t Protect Your Money - 11th Oct 19
Will Miami be the First U.S. Real Estate Bubble to Burst? - 11th Oct 19
How Online Casinos Maximise Profits - 11th Oct 19
3 Tips for Picking Junior Gold Stocks - 10th Oct 19
How Does Inflation Affect Exchange Rates? - 10th Oct 19
This Is the Best Time to Load Up on These 3 Value Stocks - 10th Oct 19
What Makes this Gold Market Rally Different From All Others - 10th Oct 19
Stock Market US Presidential Cycle - 9th Oct 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast Oct - Dec 2019 by Nadeem Walayat

Yellen is Supportive of Additional Fed Action to Support U.S. Economic Activity

Economics / US Economy Nov 30, 2011 - 03:18 AM GMT

By: Asha_Bangalore

Economics

Best Financial Markets Analysis ArticleThe Fed's Vice Chair Janet Yellen presented a case for additional Fed action to support economic activity in the United States. These two excerpts (emphasis added) from her speech indicate her opinion about the necessity for Fed action


"The Federal Reserve continues to provide highly accommodative monetary conditions to foster a stronger economic recovery in a context of price stability. Moreover, the scope remains to provide additional accommodation through enhanced guidance on the path of the federal funds rate or through additional purchases of longer-term financial assets."

More generally, I see a strong case for additional policies to foster more-rapid recovery in the housing sector. Indeed, to provide greater support for mortgage markets, the Federal Reserve recently adjusted its program for reinvesting its securities holdings.

Essentially, another round of quantitative easing made up of largely mortgage-backed securities is the likely course of Fed action in the first quarter of 2012. The Fed commenced implementation of the maturity extension program, or what is widely known as "Operation Twist," as of September 21. The program includes purchases of $400 billion of longer-term Treasury securities to replace shorter-term Treasury securities. The program has succeeded in bringing about a small reduction in mortgage rates (see Chart 1). It is expected that additional purchases should bring about a further reduction in mortgage rates. Janet Yellen’s remarks suggest that Bernanke has her vote for further Fed action, but it may take a few more weak economic reports to reduce the number of dissents that prevailed at both the August and September 2011 FOMC meetings.

Outlook of Consumers Improves in November

The Conference Board's Consumer Confidence Index increased to 56.0 in November from 40.9 in the prior month. The sharp increase reflects gains in the Present Situation (38.3 vs. 27.1 in October) and Expectations Indexes (67.8 vs. 50.0).

Households were more optimistic about the labor market when the November survey was conducted compared with their assessment in October. The number of respondents indicating that "jobs are plentiful" increased to 5.8% from 3.6% in October and fewer respondents held the opinion that "jobs are hard to get" (42.1% vs. 46.9% in October). The net of these two indexes (36.3 vs. 43.3 in October) has a strong positive correlation with the unemployment rate (see Chart 3). Based on this relationship, it should not be surprising to see to a lower unemployment rate for November when the employment report is published on Friday, December 2.

Home Prices in September Show a Small Improvement

The Case-Shiller Home Price Index fell 3.6% in September from a year ago, which represents a small improvement from August (-3.8%). In the third quarter, the Case-Shiller Home Price Index fell 3.8% vs. a 4.4% drop in the second quarter. The FHFA House Price Index declined 4.3% in third quarter vs. 4.2% in the second quarter. The good news is that home prices have stopped falling at a rapid pace. Also, the metro-level Case-Shiller Home Price Indexes show that nine metros (Chicago, Cleveland, Dallas, Detroit, Denver, Minneapolis, Portland Washington, and New York) show year-to-year gains in September.

Asha Bangalore — Senior Vice President and Economist

http://www.northerntrust.com

Asha Bangalore is Vice President and Economist at The Northern Trust Company, Chicago. Prior to joining the bank in 1994, she was Consultant to savings and loan institutions and commercial banks at Financial & Economic Strategies Corporation, Chicago.

Copyright © 2011 Asha Bangalore

The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules