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The Federal Reserve said Tuesday that the U.S. economy has improved modestly as hiring and consumer spending have picked up. As a result, it's holding off on any new steps to boost the economy.
Fed officials cautioned in their statement that unemployment remains high. And it noted that global economic growth has slowed — a reference to Europe's debt crisis. They left open the possibility of taking new steps next year if the economy worsens.
The statement had only slight changes from November's statement. It was approved by an identical 9-1 vote. Charles Evans dissented for the second straight meeting, arguing again for more action by the Fed.
Many economists said Fed policymakers likely spent their final meeting of the year fine-tuning a strategy for communicating changes in interest rates more explicitly. The Fed has left rates near zero for the past three years. More guidance would help assure investors, companies and consumers that rates won't rise before a specific time.
The Fed made no mention of a new communications strategy in its statement. But economists say it could be unveiled as soon as next month, after the Fed's Jan. 24-25 policy meeting.
In September, the Fed said it would re-arrange its bond holdings to stress longer-term maturities, to try to exert more downward pressure on long-term rates.
That followed the Fed's announcement in August that it planned to keep its benchmark rate at a record low until at least mid-2013, as long as the economy remains weak. It was the first time it had committed to keeping the rate there for a specific period. The Fed repeated that timeframe in its December policy statement.
The economy, while improving, is still weak. And it remains vulnerable to the European debt crisis, which could push the continent into a recession and slow U.S. growth. On Nov. 30, the Fed joined other central banks in making it easier for banks to borrow dollars. The goal is to help prevent Europe's crisis from igniting a global panic.
Now, Fed officials are debating how much further to go to signal a likely timetable for any rate changes. Under one option, the Fed would start forecasting the levels it envisions for the funds rate over the subsequent two years. It could publish this forecast, as it now does its economic outlook, four times a year.
Doing so would help assure investors, companies and consumers that rates won't rise before a specific time. This might help lower long-term yields further — in effect providing a kind of stimulus.
Some worry that such guidance risks inhibiting the Fed's flexibility to revise interest rates if necessary. Others counter that the Fed wouldn't hesitate to shift rates if warranted. And they say the benefits of clearer guidance outweigh any constraints it might impose.
The Fed is also discussing setting an explicit target for "core" inflation. Core inflation excludes the volatile categories of energy and food. It's remained historically low — currently around 1.5 percent by one measure.
Should the U.S. economy worsen, the Fed could take bolder steps, such as buying more mortgage securities. Doing so could help push down mortgage rates and help boost home purchases. The weak housing market has been slowing the broader economy.
The boldest move left would be a third round of large-scale purchases of Treasury securities. But critics say this would raise the risk of future inflation. And many doubt it would help much anyway, because Treasury yields are already near historic lows. Unless Europe's crisis worsens and spreads, few expect another program of Treasury purchases.
Related:
Fed is battling economic forces beyond its control
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Moderate growth??? What a lame forecast, can not be right or wrong. Just like the weatherman. So weak. Grow a set and tell us what ya really think, but NO.
You and the general public don't want to know or can't handle the truth, which is the exact same reason banks got a bailout in the first place.
All the fed is doing is delaying the inevitable, bailouts proping up bad debt, moral hazard will come back and bite us in the behind..
Moderate growth IS a forecast for a sustained, slow pickup of spending and hiring. Rather than tell someone else to grow a set, how about just using your gray matter between the ears and add a lil common sense?
Ray in Jax: Quite agree. Thanks
THE FEDERAL RESERVE BANK IS A PRIVATE COMPANY (mostly comprised of European banksters with the Rothschild’s at its head). It is neither federal nor a reserve. We have allowed foreign banksters to control our money supply therefore creating a debtor economy which makes you and me slaves to the financial system. Article 1, Section 8 of the Constitution states that Congress shall have the power to coin (create) money and regulate the value thereof. Today however, the FED, which is a privately owned company, controls and profits by printing money through the Treasury, and regulating its value.
They make up an international banking cartel who is trying to consolidate the world’s economies through their fractional reserve banking system. The FED banking system collects hundreds of billions of dollars in interest annually and distributes the profits to its shareholders (the British monarchy and the Vatican are some of their recipients). The Congress illegally gave the FED the right to print money (through the Treasury as a result of the Federal Reserve Act of 1913) at no interest to the FED. The FED creates money from nothing, and loans it back to us through banks, and charges interest on our currency. The FED also buys Government debt with money printed on a printing press and charges U.S. taxpayer’s interest. This is flat out fraud. That is why this whole European or any countries current debt crisis will never be resolved. The Federal Reserve System is designed to cause economies to fail.
If someone loans you two dollars to run your economy and expects three back for the loan and interest how are you going to pay the third back? You can’t unless you borrow more dollars which puts you in perpetual debt and in a constant borrowing cycle to pay off the debt. This is designed not accidental.
Here’s the kicker, once the Federal Reserve/banksters have you struggling to pay off your interest, they send in their loan sharks the International Monetary Fund (IMF). The IMF will loan you money to cover your ever burdening interest payments but they attach a provision that if you default, you will have to give them your assets in what they call privatization (foreclosure).
Since the interest is exponential, you will default and the banksters will come in and try to foreclose on your country, like Greece. They are being told to sell off their own country to pay back the people who caused the mess to begin with. This allows the elite to steal your intrinsic valuable assets because they gave you paper (loans/debt) and the interest on the debt that is systematically impossible to pay back.
We should not be required to pay interest on our own currency. According to Benjamin Franklin, this was one of the primary reasons we fought the Revolutionary War. Today we are still fighting the same family of banksters and our two headed one party system who are easily manipulated by the banking and financial lobbyists. Washington is Wall Street and Wall Street is Washington.
If we eliminate the FED and uphold the Constitution, we could balance the budget and cut personal income tax to almost nothing. In Congressional hearings on September 30, 1941, FED Chairman Eccles admitted that the FED creates new money from thin air (printing press), and loans it back to us at interest.
During the financial collapse in 2008 our government told us we needed to “loan” the banks 700 billion via the Troubled Assets Relief Program (TARP). They said the broke bankrupt bankster’s had used collateral for those loans. To add insult to injury we find out that the Federal Reserve acting on its own lent tens of trillions to not only American banks but to foreign banks as well. Shouldn’t we have a say in who gets loans since guess who’s on the hook to pay for those loans? It has recently been stated by economists that the Fed’s balance sheet is missing huge amounts of money and is speculated that it is currently being used for the European banking crisis. I don’t think we will ever really know. One thing that is a fact is that it has happened before.
We are experiencing the biggest bank robbery in history and the banks are doing the robbing. When you blame one political party or another they have you right where they want you, in fear, divided and distracted to the theft that is going on right in front of your eyes each and every second of the day.
Banks, Central banks, World Bank, IMF = Federal Reserve = Debtor economies, Debtor Nations (economic slaves).
At what point will the majority of American victims feel they have a right to defend their Liberty, Justice, and Freedom? We need our military to return home from around the World and fight with their fellow Americans on our own soil for our Ideals and our survival.
The Fed should qualify, The NEW READJUSTED economy grew.
Americans are only victims when they fail to support their local communities, instead of mindlessly hoarding more shlt they don't need from Wal-Mart. They are victims when they choose to bathe in mindless banther put forth by the Anti-Peace, Anti-Freedom American Mainstream Media. Above all, Americans are victims when they fall into the political LEFT-RIGHT paradigm, and believe one party is better than the other when in fact they are a two-headed monster hell bent on destroying the United States' sovereignty at the wishes of their Globalist masters. Bush=Clinton=Kerry=Bush=Obama=Gingrich=Romney...all puppets, with no real power except to sell America down the river at every turn, while America sits around and argues about it. It's the perfect ploy for their hegemony, both worldly, and monitarily: Divide and Conquer.
Support Dr. Ron Paul this election. The rest, including Obama, are just blow pieces for the real people in charge: The one's that diminish our wealth while they get wealthier, have turned the United States into a quasi-Soviet style police state, and continually disregard the aspect of the United States Constitution and Bill of Rights. Or, pick a side, make THEM happy, fight and argue, be divided.
RageAgainst is correct in that left/right, cons/lib is all the same; different heads, same direction. A modest increase is nice, but the trajectory is not good enough. We need to change up the game.
We need to take a serious look at what we have done with our economy over the last 30 years, and change what is not working. NAFTA opened our borders to cheaper goods, but at what price? Study posted last week showed that the average American receives an annual benefit of $600 due to cheaper goods. But at what cost?
Is it really cheaper, if you need to replace it twice as often now? What is our net benefit after you figure in the cost of unemployment and reduced wages for those still working. For me, the math is negative; I gave up a lot more than $600 to be able to buy cheap garbage at Walmart. I would prefer to pay 10% more for well made products that fit better, last longer, and support American workers.
Today, kids get out of school with enormous debt and no jobs, because the govt no longer supports education in this country. When I got out of school, there were good jobs, we could buy a house, generate consumer demand and keep the economy growing. Kids today can not find a job, can not pay their student loans, thus generate no consumer demand. The system is broken, and the only winners are not Americans.
We can not pretend to play on a level field when other countries play by different rules. China insists they need special rules because they are a new, growing economy. This may have made sense when Nixon visited, but has not made any sense in the last 15 years.
My company recently opened a new office in India, for two simple reasons. India covers health care costs, and supports education so that we have a large pool or qualified candidates for open positions. If we want to plan on the world stage, we need to provide our companies with an even playing field. So when politicians say cut education, cut health care, they are tilting the playing field even more towards India and China; we can not compete if we keep tieing our hands behind our backs.
Ron Paul may sound crazy at times, but he is the only candidate of any party that is even talking about these issues. And he does not change his story with every poll. I disagree with him about what should our country invest in, but as long as we get to an even playing field, I can work with that. Maybe it is time to do something crazy, and vote for someone with a few good ideas, instead of voting for the person you think will do the least damage. I am tired of voting for the lesser of two evils.
"Moderate growth" is in the eyes of the "beholder". If you want a really substantiate discussion lets talk about Corporate America. I realize that Corporate America has become a popular target for many, myself included. However in my opinion the danger of Corporate America is not the wealth it generates it's how vertually everything is measured on how the market reacts to events. Corporations, which have a right to make a profit, drive down the market when it's monetarily beneficial then point the finger at world events that are shaping the market. market control is out of hand.
The Fed can only tread water. This economy is going nowhere until people are back to work. Interest rates mean absolutely nothing to the unemployed.
Are you saying we should ignore the record Christmas sales this year as an indicator of growth? seems to me that the best Christmas sales numbers in years is a sign of improvement. Interests rates do mean something to the unemployed, because potential business that hire rely on them.....
No, it's simply means more people buying crap they don't need with money they don't have.
Do they think we all fell off the turnip truck? Hiring up slightly, spending up slightly. DUH...it's freakin Christmas time!
Anyone want to wager come Feb 2012, it's back to gloom and doom.?/
Only if the European economy tanks.... Those sales numbers you are knocking are record numbers....
those numbers mean nothing just people more in debt dream on better hope interest rates dont rise wonder how much was bought on credit dream on yes i think they did fall off the turnip truck lol
The next step is to enact a federal law, whereby, every month is treated like December in order to extent the Xmas seasonal hiring and shopping which are most likely the culprits for the info presented in this report.
And there is a reason that we should believe what the Federal government tells us, especially one run by this inept, hapless, lying administration?
I can't think of a reason, couldn't think of a reason under Bushl's lying administration. Hey, wake up, their all crooks.
They are all lying administrations who care more about furthering their career and looking good to lobbyists than doing what's right and working together and fixing this mess for the long term instead of a band aid to get elected/reelected.
No argument here. That doesn't mean I should be all over the current inept liar.
MODERATELY! R U kidding me! that is the best they can do? we are back to the future: 1990!
The Fed is full of crap, unless they are counting the increase in their defined benefit pension plans, and the increase in pay for many government workers.
part time seasonal jobs whichwill disappear in january will put the economy back in a tailspin
Agreed.
Yup the feds (BHO, Bernanke and Barney) have done well. Unemployment here in Oregon has gone from 9.2% to 9.1% in just three years.
We all feel so much better now feeling the effect of the trillions of dollars that have been spent.
I dont believe the Fed or Obama because things seem to be worser now.
I feel we are doomed! I would like to think not.
The Feds have no clue about anything! I bet they belive their own bull@!$%#!
Sounds like Obama is twisting the facts again. You sure can't tell my my paycheck nor by the social security checks vs the cost of food, gas, utilities.
The last line "speaks VOLUMES" about all of this and reads:
"Unless Europe's crisis worsens and spreads, few expect another program of Treasury purchases."
Unless Europe's crisis worsens and spreads... ?
Is there ANYONE who could even "attempt to explain" WHY "Europe's CRISIS WON'T continue to worsen and spread?
I dare ANYONE to offer ANY rational reason, just ONE... why it won't worsen. The emphasis is on "rational".
There is NO MORE MONEY and certainly no where NEAR ENOUGH MONEY to even begin to cover Europe's "current debt", let alone the Tsunami of Debt that continues to flow.
The saddest part of articles like this is that "so many people actually BELIEVE what is written?"
WOW!
Maybe a comet will hit the earth sometime next year and destroy everything- then all our problems would be solved...
The collapse and takeover of America are going as planned!