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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: Kenneth E. Phillipps who wrote (510911)	12/16/2003 10:57:47 AM
From: JakeStraw	Respond to of 769670

Fed's Minehan: Economy Picking Up Steam Tuesday December 16, 10:38 am ET By Mark Wilkinson RANDOLPH, Mass. (Reuters) - Boston Federal Reserve President Cathy Minehan said on Tuesday the economic expansion seems to be picking up steam, and suggested the central bank has time to digest the good news before raising rates. "As the expansion seems to be broadening, deepening and picking up steam, excess resources should be absorbed even as productivity growth helps keep costs in check and inflation pressures low," she told a Chamber of Commerce meeting. "I think the best guess is a path in 2004 that gradually closes the gap in resource use that was created over the last three years or so," she said, referring to relatively high unemployment and idle factories. The Federal Reserve has said it could take a long time -- possibly into late 2005 -- for the unemployment rate to fall sharply and factories to get back to full production capacity. That suggests inflation will remain low for some time, lessening the need for the central bank to raise rates. Minehan, who will be a voting member of the Fed's policy committee next year, suggested the central bank is content to watch the firming economy, without acting on interest rates. "There are risks, to be sure, and clearly, for a policy-maker like me, a firm sense of vigilance is important as the economy changes tack. But, for now, my sense is we have time to enjoy the good news," Minehan said. Financial markets expect the Federal Reserve will start raising its federal funds rate, now at 1.00 percent, around mid-2004, although some economists believe the Fed can keep rates steady until 2005. A surprise 0.2 percent fall in U.S. consumer prices in November, released earlier on Tuesday, underscored there is little inflationary pressure in the U.S. economy and interest rates can remain at 1958 lows for a long stretch. NO PRICE PRESSURES In a speech that focused on developments in productivity over the last decade, Minehan said productivity growth will remain at a relatively high level. As a result, she expects price pressures to be relatively contained, at least over the near term. She spoke before the CPI report was released. For 2004, Minehan cited consensus forecasts that the economy will grow by about 4 percent, "give or take a few tenths" of a percentage point. Minehan also said job growth should improve from this year's weak pace. "We're clearly going to get better job growth in 2004 than in 2003, that seems undeniable," she said in response to a question. She said even as the pace of consumer spending slows as the impact of tax cuts fade in early 2004, it seems likely that business spending will take up the slack. But she noted there were risks to this scenario. "The hand-off from consumer-driven to business-led growth could falter, bringing a weaker pattern to next year. "On the other hand, very low inventories combined with possible pent-up demand for labor after three years of layoffs could spark faster growth and more pressure on resources," Minehan said. Looking abroad, Minehan said conditions in Japan, Europe and most of Asia all appear to have favorable outlooks for 2004. "Much of the rest of the world appears ready to grow at a more solid and sustainable pace as well," she said, and that bodes well for U.S. export growth. biz.yahoo.com

To: Kenneth E. Phillipps who wrote (510911)	12/16/2003 11:03:20 AM
From: JakeStraw	Read Replies (1) \| Respond to of 769670

Industrial Output Up Sharply in November Tuesday December 16, 10:08 am ET WASHINGTON (Reuters) - U.S. factories, mines and utilities ramped up production sharply in November, according to a Federal Reserve report released on Tuesday showing further signs of a manufacturing recovery. The Fed said U.S. industrial production advanced 0.9 percent, its biggest monthly gain in four years. Output in the factory sector, which alone accounts for more than four-fifths of total industrial production, also posted a 0.9 percent gain. U.S. industries also operated at 75.7 percent of full capacity, their fastest pace since September 2002. Both figures were well above Wall Street expectations for a 0.5 percent gain in production and 75.3 percent capacity use rate. October production figures also were revised upward in the report, to a 0.4 percent increase from the initially reported 0.2 percent gain. Capacity in use was revised to 75.1 percent from a previously reported 75.0 percent. Tuesday's data follow on the heels of other reports showing embattled U.S. manufacturers, hit hard by the 2001 recession and slack business investment afterward, is on the rebound. On Monday, the Federal Reserve Bank (News - Websites) of New York said its monthly index of state business conditions eased to 37.4 in December from the record high of 40.1 in November. Aside from the manufacturing gain, the Fed said mining output rose 0.6 percent in November while utilities production gained 1.4 percent. November's factory figures showed gains in a wide variety of sectors, as production of durable goods - those meant to last three years or more - rose 1.4 percent. Unlike some gains in previous months, November's advance came despite a slowdown in auto production. Auto assemblies fell to a 12.06 million annual rate in November from October's 12.16 million pace. biz.yahoo.com

To: Kenneth E. Phillipps who wrote (510911)	12/16/2003 11:05:27 AM
From: JakeStraw	Read Replies (1) \| Respond to of 769670

Consumer Prices Fall; Trade Gap Shrinks Tuesday December 16, 9:16 am ET By Tim Ahmann WASHINGTON (Reuters) - U.S. consumer prices took an unexpected tumble last month, pulling the underlying rate of inflation down to a nearly 38-year low, a government report showed on Tuesday. Separate reports showed groundbreaking for new homes surged in November, while the shortfall in the U.S. current account, the broadest measure of America's trade with the rest of the world, shrank in the third quarter. biz.yahoo.com