Table of Contents
Cover Story:
The World is Flat
When it comes to Global business, the view looks good
RBD Round-Up:
RBD is On the Air!
WRCR teams up with RBD Co-publisher for weekly show
RBD Business Survey
Take part in RBD's 1st On-line Business Survey
DEPARTMENTS:
Economics Round-Up
• The Local Economy
Construction industry confidence rebounds, managers predict greater optimism
• The Smart Investor
Investing From Within: The key to becoming a smart investor
• Economic Viewpoint
It All Adds Up: The Fed takes delight in the economic numbers
Business Round-Up
• The Work-Life Minute™
Small business owners need innovation to battle burnout
• Marketing By Design
There Ought'a Be a Law: Marketing is nothing more than long-distance selling
Ask The Experts
• Business Start-ups
Negotiating a lease - from the tenant's view
• Expensing & Depreciation
Tax incentives for small business
Retail Round-Up
• Who's Hiring?
Summer employment program offers benefits to all
• New In Town
Invest in Your Community
• Provident Bank Charitable Foundation
Works to support help from People to People
• Red Cross Celebrates March
Partners with local business people for the good of all
Odds & Ends
• From The Publishers
• Letters to the Editor
• Rockland Newsmakers
Dedicated Section:
Rockland Business Association:
The President’s Desk
The State of the RBA
RBA/United Way Golf Outing
The Rockland Open: Monday, May 21st
RBA Happenings
• Committee and Council Info
• Calendar of Events
• New Members
Economic Viewpoint:
It All Adds Up
The Fed takes delight in the
economic numbers
By Bruce W. Mason
Since the last FOMC meeting in December 2006, there have been three major developments influencing their view of the economy. First, indicators showed that the economy grew above its long-term potential in the fourth quarter.
Job growth with the help of strong bonuses, boosted consumption ending the year with strong momentum. Second, Energy prices with the help of warmer weather, have fallen by more than 25%, increasing consumer spending on non-energy goods, while helping ease the rate of inflation. Third, growth outside of housing market is firm and housing activity is expected to pick up in the 2nd half of 2007.
The Fed may not feel the need to loosen monetary policy, particularly if the housing market truly is stabilizing.
As a result of the expanding economy, the Federal Reserve Bank held the fed funds rate steady at 5.25% for the fifth straight meeting. The FOMC’s statement said that core inflation has “improved modestly” with further slowing expected. The sentence on the near-term outlook for economic growth has also changed from December, to the “Overall, the economy seems likely to expand at a moderate pace over coming quarters.”
Once again the FOMC maintained its tightening bias, referring to “additional firming that may be needed”. The FOMC’s statement points to reduced odds of Fed rate cuts in the near term.
With growth well above potential at the end of 2006 and few signs of slowing so far in 2007, the Fed may not feel the need to loosen monetary policy, particularly if the housing market truly is stabilizing. The fed funds futures market, has pushed back the timing of any Fed rate cut to December.
It will take three events to unfold over the next couple of months, if the Fed is to ease:
(1) easing core inflation;
(2) slower job growth; and
(3) slower consumption growth.
If these three things do not occur, the Fed will not undertake rate cuts. RBD
Bruce Mason is the Chief Economist at Union State Bank.
The foregoing (above) comments and information are for general information purposes only and the data included is from sources we believe to be reliable but we make no representation as to the accuracy or completeness of any such information. The opinions and views are solely those of our Economist and are not guaranteed nor should they be relied upon in making any investment decision.
