"
6.0%!
4.0%!
2.0%!
.0%!
-2.0%!
-4.0%!
-6.0%!
-8.0%!
Private Inventories
800.0
6.0%!
600.0
4.0%!
400.0
2.0%!
200.0
.0%!
0.0
-2.0%!
-200.0
-4.0%!
-400.0
-6.0%!
-600.0
-8.0%!
-800.0
2.5%!
2.0%!
1.5%!
1.0%!
.5%!
.0%!
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
2006! 2006! 2006! 2006! 2007! 2007! 2007! 2007! 2008! 2008! 2008! 2008! 2009! 2009! 2009! 2009! 2010! 2010! 2010!
Source: St. Louis Federal Reserve Bank http://research.stlouisfed.org/fred2/!
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
2007! 2007! 2007! 2007! 2008! 2008! 2008! 2008! 2009! 2009! 2009! 2009! 2010! 2010!
Personal Income (quarterly percent change)!
3%!
2%!
2%!
1%!
1%!
0!%!
-1%!
-1%!
-2%!
-2%!
-3%!
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
2007! 2007! 2007! 2007! 2008! 2008! 2008! 2008! 2009! 2009! 2009! 2009! 2010! 2010!
Source: St. Louis Federal Reserve Bank http://research.stlouisfed.org/fred2/!
50000!
40000!
30000!
20000!
10000!
0!
2004!
2005!
2006!
2007!
2008!
2009 Q1!
2009 Q2!
2009 Q3!
2009 Q4!
2010 Q1!
2010 Q2!
0!
Jul-10!
Apr-10!
Jan-10!
Oct-09!
Jul-09!
Apr-09!
Jan-09!
Oct-08!
Jul-08!
Apr-08!
Jan-08!
Oct-07!
Jul-07!
Apr-07!
Jan-07!
Unemployment Rate!
12!
10!
200!
8!
0!
2!
-1000!
Unemployment!
Seasonally adjusted!
Change in Private Payrolls!
400!
-200!
6!
-400!
4!
-600!
-800!
Unemployment Situation!
Monthly/average number of weeks, seasonally adjusted,!
Percent!
20%!
U3!
U6!
Unemployment!
15%!
10%!
5%!
0!%!
Weeks!
30!
25!
20!
15!
10!
5!
0!
100.0
95.0
90.0
85.0
80.0
Job Openings!
Seasonally Adjusted!
Percent!
Unemployment Rate!
JOLTS!
Thousands!
12!
6000!
10!
5000!
8!
4000!
6!
3000!
4!
2000!
2!
1000!
0!
0!
Change in Employment!
Percent change in various sectors!
July 1981 November 1982
Professional Services!
Retail!
Trade, Transportation,
Utilities!
Manufacturing!
Construction!
Total Private!
-20! -15! -10! -5!
0!
0!
5!
0!
5!
-5
Source: Minneapolis Federal Reserve http://www.minneapolisfed.org/news_events/pres/ & St. Louis Federal Reserve http://research.stlouisfed.org/fred2/!
25%!
20%!
15%!
10%!
5%!
0!%!
0.0
Jan-07
Feb-07
Mar-07
Apr-07
May-07
Jun-07
Jul-07
Aug-07
Sep-07
Oct-07
Nov-07
Dec-07
Jan-08
Feb-08
Mar-08
Apr-08
May-08
Jun-08
Jul-08
Aug-08
Sep-08
Oct-08
Nov-08
Dec-08
Jan-09
Feb-09
Mar-09
Apr-09
May-09
Jun-09
Jul-09
Aug-09
Sep-09
Oct-09
Nov-09
Dec-09
Jan-10
Feb-10
Mar-10
Apr-10
May-10
Jun-10
Jul-10
Aug-10
Sep-10
Percentage!
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
200.00!
150.00!
100.00!
50.00!
0.00!
PMI!
70.0!
105.00!
65.0!
100.00!
60.0!
95.00!
55.0!
50.0!
90.00!
45.0!
85.00!
40.0!
80.00!
Jul-10!
Apr-10!
Jan-10!
Oct-09!
Jul-09!
Apr-09!
Jan-09!
Oct-08!
Jul-08!
Apr-08!
Jan-08!
Oct-07!
Jul-07!
Apr-07!
30.0!
Jan-07!
75.00!
Jan-07!
Mar-07!
May-07!
Jul-07!
Sep-07!
Nov-07!
Jan-08!
Mar-08!
May-08!
Jul-08!
Sep-08!
Nov-08!
Jan-09!
Mar-09!
May-09!
Jul-09!
Sep-09!
Nov-09!
Jan-10!
Mar-10!
May-10!
Jul-10!
Sep-10!
35.0!
Capacity Utilization!
Seasonally adjusted, monthly!
85.0!
80.0!
75.0!
70.0!
65.0!
60.0!
4.0!
2.0!
0.0!
-2.0!
-4.0!
-6.0!
-8.0!
-10.0!
-12.0!
0.0!
Q1 1981!
Q4 1981!
Q3 1982!
Q2 1983!
Q1 1984!
Q4 1984!
Q3 1985!
Q2 1986!
Q1 1987!
Q4 1987!
Q3 1988!
Q2 1989!
Q1 1990!
Q4 1990!
Q3 1991!
Q2 1992!
Q1 1993!
Q4 1993!
Q3 1994!
Q2 1995!
Q1 1996!
Q4 1996!
Q3 1997!
Q2 1998!
Q1 1999!
Q4 1999!
Q3 2000!
Q2 2001!
Q1 2002!
Q4 2002!
Q3 2003!
Q2 2004!
Q1 2005!
Q4 2005!
Q3 2006!
Q2 2007!
Q1 2008!
Q4 2008!
Q3 2009!
Q2 2010!
2500.0!
2000.0!
1500.0!
1000.0!
500.0!
Inflation Measures!
Percent change, annually, seasonally adjusted!
Jul-10!
Apr-10!
Jan-10!
Oct-09!
Jul-09!
Apr-09!
Jan-09!
Oct-08!
PPI!
Jul-08!
Apr-08!
Jan-08!
Jul-07!
Apr-07!
Jan-07!
Oct-06!
Jul-06!
Apr-06!
Jan-06!
Jul-10!
Apr-10!
Jan-10!
Oct-09!
Jul-09!
Apr-09!
Jan-09!
Oct-08!
5%!
4%!
3%!
2%!
1%!
0 %!
-1%!
-2%!
-3%!
-4%!
-5%!
-6%!
Oct-07!
Core PPI!
CPI!
Jul-08!
Apr-08!
Jan-08!
Oct-07!
Jul-07!
Apr-07!
Jan-07!
Oct-06!
Jul-06!
Apr-06!
5%!
4%!
3%!
2%!
1%!
0!%!
-1%!
-2%!
-3%!
-4%!
-5%!
-6%!
Jan-06!
Core CPI!
Implicit Inflation!
2.0
1.5
1.0
0.5
0.0
Q1
2006
Q2
2006
Q3
2006
Q4
2006
Q1
2007
Q2
2007
Q3
2007
Q4
2007
Q1
2008
Q2
2008
Q3
2008
Q4
2008
Q1
2009
Q2
2009
Q3
2009
Q4
2009
Q1
2010
Q2
2010
Q3
2010
Inflation Expectations!
Percent change, annually, seasonally adjusted!
TIPS Break-Even!
4.00!
2.55!
3.00!
2.5!
2.00!
2.45!
1.00!
2.4!
0.00!
2.35!
-1.00!
2.3!
-2.00!
Jan-07!
Mar-07!
May-07!
Jul-07!
Sep-07!
Nov-07!
Jan-08!
Mar-08!
May-08!
Jul-08!
Sep-08!
Nov-08!
Jan-09!
Mar-09!
May-09!
Jul-09!
Sep-09!
Nov-09!
Jan-10!
Mar-10!
May-10!
Jul-10!
Sep-10!
-3.00!
2.25!
2.2!
Q2
2007!
Q4
2007!
Q2
2008!
Q4
2008!
Q2
2009!
Q4
2009!
Q2
2010!
Source: St. Louis Federal Reserve Bank http://research.stlouisfed.org/fred2 and Philidelphia Fed Bank - http://www.philadelphiafed.org/research-and-data/!
160!
140!
120
120!
100
100!
80
80!
60
60!
40
40!
20
20!
0!
2007!
2008!
2009!
2010!
2006
2007
2008
2009
10!
8!
6!
4!
2!
0!
2500000
2000000
1500000
1000000
500000
0
2002
2003
2004
2005
2006
2006
2007
2008
2009
2009
2010
3!
2.5!
2!
1.5!
1!
0.5!
Sep-10!
Jul-10!
May-10!
Mar-10!
Jan-10!
Nov-09!
Sep-09!
Jul-09!
May-09!
Mar-09!
Jan-09!
Nov-08!
Sep-08!
Jul-08!
May-08!
Mar-08!
Jan-08!
Nov-07!
Sep-07!
Jul-07!
May-07!
Mar-07!
-0.5!
Jan-07!
0!
Additional Approaches!
Decrease Interest on Existing Reserves!
Pros
Cons
Funds Rate.
Financial Institutions
Sheet.
decrease marginally
Market Funds
Funds Market.
Additional Approaches!
Changing
Pros
Changing it to indicate a longer
inflation expectations
Cons
Can box-in the Fed to
Ali Emamdjomeh!
Governor!
Michael Dimitrov!
Governor!
additional action
LSAP should be gradual to prevent dislodging inflation
expectations
Implement a price target of 2%
Robert Luo!
Vice-Chairman, New York!
Elias Scheker!
President, Kansas City!
in the future
Effectiveness of monetary policy is limited due to structural
issues
Increase federal Funds rate to 1% and remove the extended
Mark Zaguskin!
Chairman!
consistent rate
No change in the extended period of time wording of the
statement
Adopt a price target
"