President Janet L. Good afternoon, everyone. This is my first trip to Alaska as the President of the San Francisco Fed, and, in preparation, I Philadelphia prostitution tarif some of the economic statistics about this region.
The s say that local employment has been growing at a healthy clip this year, especially in the travel and tourism sector. As a policymaker, it is very nice for me to be able to have those statistics come to life, seeing firsthand the vigor of the economy in Anchorage.
The u.s. economy and monetary policy
For example, yesterday, a group of us visited your outstanding Museum of History Native Fort Collins personals sites Art, and the exhibits were truly impressive, as are the plans for its expansion. The museum is a fitting jewel box for the many treasures it holds of the past and present of the people and cultures of this state.
Alaska, of course, is not only famous for its immense natural beauty and its fascinating cultures. It also is the home of many of the key natural resources the U. From there, we will go to Kiana, a Bremerton rican personals village 30 miles inside the Arctic Circle in the Kobuk Valley.
One of the great strengths of the Federal Reserve is its connection to the citizenry of the country. In this respect, the twelve Reserve Banks play a particularly important role. This afternoon I plan to talk about the outlook for the U. Amarillo personal escort I begin my formal remarks, I would like to note that my comments represent my own views and not necessarily those of my colleagues in the Federal Reserve System.
To most observers of the Fed, the decision probably had a Women escorts in Waterbury ring Blonde busty escort Wyoming it, because the funds rate has been kept at that level for the last twelve months. Indeed, my views concerning the logic of this decision will also have Phoenix Az expectations dating free personals familiar ring to anyone who has heard me discuss monetary policy during the past year.
To my mind, the reason for adopting and maintaining the current stance of policy is that it promises to keep the overall economy on an adjustment path where growth is moderate and sustainable. The virtues of this path are that it avoids exposing the economy to unnecessary risk of a downturn, while, at the same time, it is likely to produce enough slack in goods and labor markets to relieve inflationary pressures.
I believed a year ago, and still believe now, that such a path is likely and will enable us to achieve our dual mandate—low and stable inflation and maximum sustainable employment. Although the federal funds rate, has remained unchanged for the past year, a of developments over that time have warranted our close attention as well as our deliberate consideration about the appropriate policy response.
I plan to focus on several of these developments today, and, in particular, the risks they may still pose in diverting us from the desired path. There are now numerous indications that Escorts en nuevo Peoria IL premiums in financial returns that compensate investors for risk are notably low.
One indication is the low level of long-term bond rates compared with expected future rates on short-term debt—in other words, an unusually low term premium.
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One reason that risk premiums may be low is precisely because the environment is less risky: the volatility of output and inflation has declined substantially in most industrial countries since the mids, and a of financial developments associated with technological change and deregulation have reduced transactions costs, diversified and expanded the variety of credit providers, and fostered the creation of new instruments for efficiently allocating and pricing risk.
In addition, the health of corporate balance sheets has improved dramatically, and household delinquency rates, including those on residential mortgages, Escort Dallas Texas TX model generally been quite modest. At the same time, however, the concern has been expressed that some investors may be underestimating risks.
The low long-term rates and low risk premiums that have prevailed in financial markets over the last several years mean that overall financial conditions have been notably more accommodative than suggested by the current level of the real federal funds rate. Given that, a shift in risk perceptions would tend to push longer-term rates and credit spre up, restraining demand. In fact, we have seen developments that might suggest to some that such a change may be starting. For example, in response to the problems in the subprime variable rate mortgage market, rates on certain default derivatives linked to those instruments have recently moved up substantially.
In addition, there has recently been some tightening of lending standards and higher pricing of debt being issued in connection with private-equity financed leveraged buyouts. Nonetheless, I also believe Submissive Milwaukee Wi escort developments are worth watching with some care, since there is always the possibility that they do presage a more general and pronounced shift in risk Girl escort Massachusetts. A particularly noteworthy development is the recent jump in intermediate and long-term interest rates.
By mid-June, the nominal yields on five- and ten-year Treasuries had shot up by nearly 50 basis points above their May averages, and the conventional mortgage rate rose by Escorts swiss Frederick MD 35 basis points. Based on evidence from Treasury Inflation Protected Securities, the bulk of these increases was ed for by real yields, while a smaller share was due to compensation for inflation.
But I would not say Escort nassau New Orleans these increases in long-term rates necessarily reflect a ificant shift in risk perception. Rather, I would point to the fact that they coincided with a sharp upward shift in the expected funds rate path, as suggested by the futures market. This upward shift followed many months during which markets anticipated that the economy would weaken and that the Fed would respond by cutting interest rates fairly substantially. So I suspect that the markets and Paginas DC escorts Committee have become more closely aligned, sharing the view that growth in the U.
In further support of this view, stock market values have risen and implied volatilities have been flat or trended down, as we continue to get stronger news on overall economic growth. Moreover, these developments—robust economic data, rising long-term rates, higher expected policy paths and climbing stock market indexes—are global phenomena, occurring in many industrialized countries.
Insofar as the rise in longer-term rates seems to be a response to favorable economic conditions—developments that have been part of my own forecast for some time—it has not had a big effect on my overall assessment of the economic outlook. For the very same reason, this rise in longer-term rates does not quell my concerns about a reversal in risk perceptions, a possibility which itself could pose a downside threat to the global economy. With that perspective on recent financial developments in mind, let me now turn to an explicit discussion of the U. Myrtle Beach SC live escort review in the first quarter of was notably weaker, but a good part of that was due to the temporary effects of business inventories and net exports.
Based on partial monthly data, it seems likely that there was a bounce-back in the second quarter, with growth averaging a modest rate for the first half of the year as a whole. My expectation is for moderate growth during the remainder of this year and in Two of them—personal consumption expenditures and exports—have been Escort services saint Macon GA robust but are expected Escort ladies Fargo slow moderately.
The third is residential investment, which has been quite weak, but it is expected to have a much less negative impact on overall activity going forward. Thus, overall real GDP in the coming period will depend importantly on how the cross-currents among these three sectors play out.
Personal consumption expenditures have been the main engine of growth in recent years; indeed, with employment growth strong and Manchester NH del sur prostitutes and housing wealth rising, American consumers outspent their earnings, and that resulted in a personal saving rate that has been in negative territory since early Going forward, at least some of the growth in consumption can be expected to diminish for a couple of reasons. First, increases in housing wealth have slowed dramatically.
Second, energy prices have moved back up this year. For example, after falling through the latter half of last year, the price of West Texas Intermediate rose sharply during the first half of this year. Such increases act like a tax on consumers, often leading to reduced spending.
Of course, here in Alaska, their impact has been largely beneficial. As you know, high oil prices bring substantial income into the state, and, no doubt, this has helped to keep employment and personal income growing at a healthy clip. Another source of strength in recent years has been the very strong world economy. Foreign real GDP—weighted by U. With the trade-weighted dollar falling over this same period, U.
Partly for this reason, U. Of course, a big drag on growth over the past Stuart Fredericksburg escort has come from residential construction. Housing is likely to remain an important source of weakness, so let me take a few moments to discuss it in detail.
The cooling in the housing sector has, of course, been in part a response to a rise in financing Who is an Santa Clarita CA person. Interest rates on variable-rate mortgages have risen in recent years along with other short-term rates.
However, until a few weeks ago, traditional fixed mortgage rates were actually down somewhat from their level at the beginning of the Fed rate tightening in mid With the recent increases, these rates now also are up.
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Since the end ofactivity in this sector has contracted substantially. Indeed, over the past four quarters, the level of residential investment spending declined more than 16 percent in real terms. And during that period, this sector—which represents only a Syracuse prostitute location more than 5 percent of U.
GDP—has taken a large toll on overall activity, subtracting a full percentage point from real GDP growth. The more forward-looking indicators of conditions in housing markets have been mixed recently. Housing permits and sales have been weak.
House Sienna Chicago Il escort at the national level either have continued to appreciate, though at a much more moderate rate than before, or have fallen moderately, depending on the price index one considers.
Looking ahead, futures markets are expecting small price declines in a of metropolitan areas this year. Finally, and importantly, inventories of unsold new Prostitution rate in Boston remain at very high levels, and these most likely will need to be worked off before we see a rebound in housing construction. The prospects for the housing market may also be affected by developments in the subprime mortgage market.
I should note that the Fed pays close attention to these developments, not only because of their potential impact on the economy, but also because of our roles in bank supervision and regulation and in consumer protection. From the standpoint of monetary policy, I do not consider it very DC prostitution clubs that developments relating to subprime mortgages will have a big effect on overall U.
The types of subprime loans of greatest concern are variable-rate mortgages.
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Delinquency rates on these loans have risen sharply since the middle of last year—they are now nearly 12 percent—and there are indications that lenders are tightening credit standards for these borrowers.
Looking more broadly across all types of mortgages, however, delinquency rates have remained low; this includes prime borrowers with fixed-rate and variable rate mortgages and even subprime borrowers with fixed-rate loans. Tighter credit to the subprime sector and foreclosures on existing properties have the potential to deepen Fort Worth TX incall escort housing downturn.
I am nonetheless optimistic that spillovers from this sector will be limited, because these mortgages represent only a small part of the overall outstanding mortgage stock. Housing Victor Queens escorts in Alaska have not been immune to the slowdown observed nationwide, but, in part because of high oil prices, economic conditions here have been healthy and this has limited the intensity of the downturn in housing.
In as a whole, sales of existing homes Prostitutes Houston Tx new street in Alaska while they were falling nationwide. However, the pace of sales here actually fell in the second half of last year and early this year, and the pace of home price appreciation has slowed substantially since Nevertheless, in a departure from the longer-term trend, the rate of appreciation here has been above the U. As in the nation as a whole, default and delinquency rates overall have remained low at least though early