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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (104510)	5/24/2001 11:52:31 AM
From: Ilaine	Respond to of 436258

Hadn't thought of that. Dirty rat bastards! -g-

To: Les H who wrote (104510)	5/24/2001 11:57:58 AM
From: Les H	Read Replies (4) \| Respond to of 436258

Behind the Fed's optimistic talk: FED TALK: An article by the Wall St. Journal's David Wessel today suggests that the Fed expects the stock market's slide to weigh on consumer spending through the rest of this year and into 2002. "That restraint on the economy makes the Fed less worried about the risk of cutting rates too much now and causing inflation later," writes Wessel, who has excellent credibility (and contacts) when it comes to the Fed. Wessel writes that Greenspan last year asked Fed staff to investigate the stock market wealth effect on the economy. The conclusion: "Ups and downs of the stock market don't foreshadow where the economy is headed; they drive it directly," Wessel writes. "The very households that benefited the most from rising stock prices, the 20% with incomes above $80,000, were the ones who saved less and spent more during the stock-market boom...", he adds. While there is some disagreement about timing, Greenspan sides with Fed economists in Washington who believe investors hesitate before adjusting their spending patterns to changes in the market, in order to be sure a market move won't be quickly reversed. In other words, consumers are expected to continue reacting to the weakness in equities "for another few quarters," according to Wessel. It will be interesting to see if any of this shows up in Greenspan's speech tonight. Here is a link to the story (subscription required) and here is a link to Federal Reserve Board research.