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fomc | 1,993 | Thank you. Well, the First District isn't outperforming the nation but we are seeing continued improvement. And now I'd have to say that we have legitimately moderate growth. [In our] area there is not a boom but a substantial amount of what I would call boom momentum, where people certainly are feeling a lot better ab... | 338 |
fomc | 1,993 | You're not making your point clear. | 7 |
fomc | 1,993 | Okay. | 2 |
fomc | 1,993 | Are you saying that the electric price cost structure goes up but there has been a shift to nonelectric furnaces--? | 24 |
fomc | 1,993 | What has happened is that scrap prices, as you know, are up substantially. | 16 |
fomc | 1,993 | Yes. | 2 |
fomc | 1,993 | But many of the users of these final products of steel generate a lot of scrap themselves. And the increase in scrap prices has been of such a magnitude that it has more than washed over for them the increase in the output price of the finished steel that they're buying. And you say: Well, how can that happen? As it tu... | 79 |
fomc | 1,993 | I see. | 3 |
fomc | 1,993 | And what happens is that now the marginal cost of steel is being [unintelligible], as I understand it, at the integrated mills, and as that has happened there has been a reduction in the margin that the electric mills have had. | 49 |
fomc | 1,993 | Well, the non-mini-mill electric furnace operators are the big [unintelligible]. | 19 |
fomc | 1,993 | As I understand it--and Si would know much more about this than I do--the mix has changed between the integrated mills and the electric mills. | 30 |
fomc | 1,993 | Right. | 2 |
fomc | 1,993 | Significantly. | 4 |
fomc | 1,993 | Okay, I'm just curious. | 6 |
fomc | 1,993 | At any rate as far as the national situation goes, we very much agree with the Greenbook forecast in general. We are more optimistic on the price outlook. I have to confess that's on the basis of what one might call gross macro relationships; I guess you can read that to be Phillips curves. | 60 |
fomc | 1,993 | I hope so. | 4 |
fomc | 1,993 | As for where we go from here, I think we're clearly into the most difficult time in terms of deciding what to do with policy. The key question is how much slack there is in the economy because on this issue of how strong growth is going to be in the first half of the year or even for the year as a whole, we simply don'... | 148 |
fomc | 1,993 | President Boehne. | 5 |
fomc | 1,993 | Well, the same upward momentum is apparent in the Middle Atlantic states as well. We've been a region that has lagged the nation; I think that is still true, although clearly attitudes and aggregate demand are stronger. We're seeing it in many parts of the District and we're seeing it across industries, most notably in... | 440 |
fomc | 1,993 | President McTeer. | 5 |
fomc | 1,993 | Growth in economic activity in the Eleventh District has slowed a little since the last FOMC meeting. There was an actual decline in employment in October but that was primarily due to some special circumstances, including an early retirement program for the state which eliminated 6,000 government jobs and some earlier... | 436 |
fomc | 1,993 | President Melzer. | 4 |
fomc | 1,993 | Thank you, Alan. The economic outlook for the Eighth District economy continues to be favorable. Retail and auto sales are very strong and most of the other firms we surveyed report increases in sales, orders, and employment. Loan demand continues to strengthen in some parts of the commercial and retail markets for Dis... | 479 |
fomc | 1,993 | President Stern. | 3 |
fomc | 1,993 | Thank you, Mr. Chairman. With regard to the economy of the Ninth District, there has been further improvement; that's a trend that has been under way for quite some time. The stronger sectors appear to be consumer spending and residential construction. And some people have even used the language that the District econo... | 411 |
fomc | 1,993 | Governor Angell. | 4 |
fomc | 1,993 | Thank you, Mr. Chairman. When we look at this process, it does involve a lot of attention on the real economy; that is, each of the twelve Presidents naturally has a responsibility to speak about economic conditions in his District. It wasn't too long ago that various groups were unified--well, unified or crossed--in t... | 1,820 |
fomc | 1,993 | President McDonough. | 5 |
fomc | 1,993 | The Second District is still relatively flat except for the financial services firms; both commercial banks and investment banks are doing very well. The industrial and service firms in the District, especially the larger ones, are still concentrating on reducing staff and improving productivity. They are not looking a... | 526 |
fomc | 1,993 | Governor Kelley. | 3 |
fomc | 1,993 | Thank you, Mr. Chairman. First let me say that I think your remarks early in the meeting concerning Governor Angell's departure were very well taken. He may leave us physically but his influence is certainly going to remain. His statement of a minute or two ago was a beautiful cameo that he's leaving [with] us for that... | 815 |
fomc | 1,993 | Governor LaWare. | 4 |
fomc | 1,993 | Thank you, Mr. Chairman. I must say that I have a tendency to agree with the concerns about the continued contraction of military spending, the full impact of higher taxes, and the persisting sense of job insecurity, which I think will continue to be driven for some time by corporate re-engineering. I don't see any rea... | 259 |
fomc | 1,993 | Governor Mullins. | 4 |
fomc | 1,993 | Thank you. I think the developing pattern of incoming data continues to confirm what we all recognize. Head winds continue to diminish. We haven't heard a lot about head winds lately. And a traditional pattern of interest-sensitive spending seems to be well entrenched and is fueling sustainable moderate growth led by b... | 894 |
fomc | 1,993 | It's 6.5 percent. | 7 |
fomc | 1,993 | Yes, it's 6.5 percent using concurrent seasonals. But it's down well over a percentage point in the last year and a half. We might ask where it might be a year and a half from now. I know it has come down in the last year and a half by over a point and we might think about that. I know there's going to be a measurement... | 1,147 |
fomc | 1,993 | Governor Lindsey. | 3 |
fomc | 1,993 | Thank you, Mr. Chairman. I, too, want to second what Governor Kelley said about Wayne Angell's departure. Mr. Chairman, you used the word "subliminal" in his effect. If I may, I would say the phrase should have been "subliminal but never subtle." [Laughter] | 66 |
fomc | 1,993 | I accept that. | 4 |
fomc | 1,993 | We have two puzzles that everyone has been discussing. One is the unsustainably low personal saving rate and the other is the absence of price pressures in the presence of a rather high capacity utilization rate. I have two thoughts. I've thought about both of them and, since they haven't come up, I thought I'd throw i... | 1,430 |
fomc | 1,993 | Finally, Governor Phillips. | 5 |
fomc | 1,993 | Clearly, the economy is strong in the fourth quarter and on firm footing going into '94. I think the interesting thing about this is that people right now also are believing that things are better. Confidence is up perhaps because the employment situation is stronger. People are voting with their feet by spending, and ... | 572 |
fomc | 1,993 | Thank you very much. I'm certain the coffee is available. While we do need to go on our break, let's make it reasonably short. | 28 |
fomc | 1,993 | [Statement--see Appendix.] | 6 |
fomc | 1,993 | Questions for Don? | 4 |
fomc | 1,993 | Early this year when we were asymmetric for a stretch, how long were we asymmetric? | 17 |
fomc | 1,993 | Two meetings, May and July. | 7 |
fomc | 1,993 | What is the pattern over the years of asymmetry in one direction or another? And what's the longest episode where we've been asymmetric in one direction and not done anything? | 33 |
fomc | 1,993 | I don't know. I did have a table put together; it doesn't have it by episodes. But it has the number of asymmetries and moves made after the asymmetries. Of course, we had two this year with no move. In '92 we had six asymmetries and moved three times; in '91 it was five for five; in '90 four for five; in '89 two for f... | 145 |
fomc | 1,993 | Don, at what meetings in '87 were we asymmetrical? When did we first go [asymmetrical], at the March meeting? | 28 |
fomc | 1,993 | August 18th we were asymmetrical toward firming. Oh, you're right; early in the year we must have been asymmetrical toward tightening--I don't have the complete record here--but we went back to symmetry then back toward firming in August and then back to symmetry. And then toward ease after the crash. | 65 |
fomc | 1,993 | Right. | 2 |
fomc | 1,993 | Don, could I just ask the mirror of that question, which is: What is your rough recollection of the portion of the times we've taken action without being asymmetric? In other words, 60 percent of the time we were asymmetric and did something. What percentage of the time did we do something and we were not asymmetric? | 66 |
fomc | 1,993 | Well, if this table is right, which goes from '87 through November of this year, we took seven actions from symmetric directives. | 27 |
fomc | 1,993 | As compared to how many altogether? | 7 |
fomc | 1,993 | Out of 20 from asymmetric directives. | 8 |
fomc | 1,993 | July '92 [unintelligible]. | 9 |
fomc | 1,993 | Don, I would imagine there was some kind of relationship between lags--how long it takes us before we start raising [rates]--and how far we have to raise [them]. Do you have any good ideas or rules of thumb on that? | 51 |
fomc | 1,993 | No, I don't have any rules of thumb, Governor Lindsey. The point I was trying to make was that if you do delay and inflation expectations in particular get going, you're going to have to raise rates not only to cover the higher inflation expectations but-- | 51 |
fomc | 1,993 | But even more. | 4 |
fomc | 1,993 | -- if you have a certain inflation target you're going to have to overshoot to get that down again. But I don't have a rule of thumb. It would depend on where you were in the cycle and how far you-- | 45 |
fomc | 1,993 | The only case I can think of was '66 where the Fed [implemented] just one small increase. Can you remember how much of an increase that was and how long it lasted? | 37 |
fomc | 1,993 | No, I don't. | 5 |
fomc | 1,993 | Any further questions? If not, several people have mentioned that we ought to speed this meeting up so I'm going to [compress] my views since I generally agree with a number of arguments that have been made. First of all, let me just say that it's rather obvious at this point that the acceleration we are seeing is very... | 1,376 |
fomc | 1,993 | Your remark suggested to me something about communicating our actions which I hadn't considered before, and that is if the next action were to be communicated as easing the degree of accommodation, it would be an easing move I think. I'm increasingly troubled by the rhetoric on the outside--by people looking at what we... | 187 |
fomc | 1,993 | Well, let me say that I fully agree with that and I would say the issue is credit. | 20 |
fomc | 1,993 | What I would like to see us be doing is setting some objective out some four or five years. In fact, I hope the Bluebook for the February meeting gives us a longer-term indication of a price level path. My belief is that if we have both an objective of moving to price stability measured somehow in, say, four or five ye... | 375 |
fomc | 1,993 | President Boehne. | 5 |
fomc | 1,993 | I think the days of this degree of accommodation are numbered. It's likely to be sooner rather than later that we'll have to reduce the level of accommodation. I do think, however, that we're in a period of wait-and-see. And when we do move, I believe that this Committee should vote explicitly to make that decision bec... | 113 |
fomc | 1,993 | President Parry. | 4 |
fomc | 1,993 | Mr. Chairman, I think it is quite likely that after the current quarter we will see more moderate growth next year and, therefore, I could support alternative B. It's a little hard for me to reach the conclusion that the risks are symmetrical, which leads me into the direction of thinking that there is a case for asymm... | 87 |
fomc | 1,993 | President Broaddus. | 5 |
fomc | 1,993 | Mr. Chairman, I certainly respect your position but, as I said earlier, I think the accumulation of positive economic news that we're seeing now is really quite extraordinary. And in this situation I think the time has come to let real short-term interest rates rise in order to make this expansion a sustainable one and... | 361 |
fomc | 1,993 | President Forrestal. | 4 |
fomc | 1,993 | Mr. Chairman, if I thought that our forecast were correct and were to be fulfilled, I would certainly want to move sooner rather than later. I think the probability is that that forecast will turn out to be the right one. But there are enough uncertainties surrounding that forecast for me to want to wait just a little ... | 137 |
fomc | 1,993 | Governor Lindsey. | 3 |
fomc | 1,993 | The comments I've heard so far suggest an incompatibility. I agree that we want to take action at a meeting; I think that's important. I also think that what Jerry Jordan said was very true. We don't want to be reacting to a high real growth number. That's simply bad policy and it's also bad PR. We have nothing against... | 100 |
fomc | 1,993 | I don't know. | 4 |
fomc | 1,993 | Well, we are betting that the number is going to be high. And I think it's [released] that Friday. Isn't that correct? | 28 |
fomc | 1,993 | No, it's the employment report that is-- | 9 |
fomc | 1,993 | When is the first [release of] the GNP number [for the fourth quarter]? | 18 |
fomc | 1,993 | The 20th of January. | 7 |
fomc | 1,993 | So the last statistic out before [that meeting] would be a strong real growth number, and I think we'd be perceived as reacting to that high real growth number. And we'd probably have a strong employment report following that. Therefore, I don't see us acting at the February meeting; I would see us postponing until Mar... | 107 |
fomc | 1,993 | President Syron. | 4 |
fomc | 1,993 | Mr. Chairman, I support your proposal. We're always going to be acting in a situation of uncertainty; that's just the way it is. If it was certain, we wouldn't need to be here. And I think the time has come, if we're going to make a mistake, to err on the side of tightening rather than staying in a non-neutral position... | 158 |
fomc | 1,993 | President McTeer. | 5 |
fomc | 1,993 | I came into the meeting, Mr. Chairman, thinking that the time was coming soon to ease off the accelerator a bit but that it probably wasn't here yet. Then I was influenced very much by the statements of Messrs. Broaddus, Angell, Lindsey, and Mullins. I think Mr. Mullins gave a good argument for doing something now, alt... | 330 |
fomc | 1,993 | President Melzer. | 4 |
fomc | 1,993 | I favor increasing the degree of pressure on reserve positions now. I think the economy's momentum has intensified to the point that the capacity to maintain moderate inflation, not to mention declining inflation, appears to have run out. As I mentioned before, the growth of the narrow money and reserve aggregates has ... | 208 |
fomc | 1,993 | President Hoenig. | 4 |
fomc | 1,993 | Mr. Chairman, as I said earlier, I think the information and evidence are mounting that we do have an economy that will sustain itself through next year [with] inflationary pressures. So I am inclined to see the rates moved modestly up to be, in a sense, anticipating that. But I'm certainly willing to see how it goes a... | 105 |
fomc | 1,993 | Vice Chairman. | 3 |
fomc | 1,993 | Mr. Chairman, I agree with "B" symmetric and let me say why. I think that a combination of a great many outside remarks accompanied by the remarks that a number of us--first person plural--have made have led the world to believe that we are anti-growth, and that's a very bad position to be in. It's bad monetary policy,... | 541 |
fomc | 1,993 | President Keehn. | 4 |
fomc | 1,993 | Mr. Chairman, I also would be in favor of alternative B with symmetric language. It does seem to me that the environment is one in which the policy stance ought to be heading to asymmetry toward tightening. But I do think it's a question of timing. The key here will be how the first-quarter data begin to come in rather... | 115 |
fomc | 1,993 | Governor LaWare. | 4 |
fomc | 1,993 | I'm a little puzzled by the fact that almost everyone who has spoken so far has said that they were convinced that we were going to have to tighten sooner rather than later and yet they have been willing to buy into a stand pat symmetric language directive right now, even though everybody is expressing concern about re... | 142 |
fomc | 1,993 | Governor Angell. | 4 |
fomc | 1,993 | Mr. Chairman, I certainly feel I'm in good company here. There is- | 16 |
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