Economic Outlook and Current Topics

Economic Outlook and Current Topics

Christopher J. Neely

Assistant Vice President, Federal Reserve Bank of St. Louis

The Cash Management Forum Four Seasons Hotel, St. Louis, MO

August 23, 2011

The opinions expressed are my own and not necessarily those of the Federal Reserve Bank of Saint Louis or the Federal Reserve System. I thank Brett Fawley for his able assistance in constructing this presentation.

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Who Am I?

I am a research economist, not a forecaster, not a business economist.

o My research is primarily on exchange rates.

Economists are much better on why the past happened.

o Economic events should be difficult to forecast for the same reason that financial markets are hard to forecast.

Economics has recently become much more controversial. I try to be as objective as possible.

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Today's Topics

The Current Outlook

o GDP, employment, manufacturing, housing, inflation, financial markets

o Fiscal policy and inflation

Additional topics?

o Fed Policy & Quantitative Easing

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The Current Outlook

GDP The Labor market Industry/manufacturing Construction /housing Credit/delinquency The Global outlook

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The Current Outlook: GDP

6

Real Gross Domestic Product

Actual and Forecasted, percent change from previous quarter at annual rate

4

2

0

-2 About 1% over the first half

-4

of 2011.

Real GDP Growth -6

-8

-10 2007 2008 2009 2010 2011 2012

Source: Bureau of Economic Analysis/Macroeconomic Advisers

2013

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The Current Outlook: Real GDP Forecasts

Economic projections from the July 2011 Monetary Policy Report to Congress

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The Current Outlook: Industrial Production

Percent Change from Previous 2

Index 70

1

60

0

50

-1

40

Weak ISM index.

-2

Industrial Production (Left

30

Axis)

-3

ISM Manufacturing (Right

20

Axis)

-4

10

-5

2007

2008

2009

2010

2011

Source: Federal Reserve Board/Institute of Supply Management

0

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