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To: Tommaso who wrote (51910)	5/31/2006 2:16:13 PM
From: mishedlo	Respond to of 116555

DJ FOMC May Minutes: Upside Inflation, Downside Econ Risks DJ FOMC:Debate Ranged From No Fed Funds Change To 50BP Hike DJ FOMC: Rise In Price Expectations 'Worrisome' But Small DJ FOMC: Inflation Expectations Warrant 'Close Monitoring' DJ FOMC: Staff Forecasts Inflation To Slow Later In '06 DJ FOMC: Unsure How Much 'If Any' More Tightening Needed DJ FOMC: Lagged Rate Impact On Housing Could Be Larger DJ FOMC: Lower Dollar Could Add To Inflation Pressures DJ FOMC May Minutes: Upside Inflation, Downside Econ Risks By Brian Blackstone Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--In what appeared to be a wide-ranging discussion of the monetary policy outlook earlier this month, U.S. Federal Reserve officials concluded that there were both upside risks to inflation and downside risks to economic growth, according to the minutes of the May 10 meeting of policymakers released Wednesday. While the Federal Open Market Committee minutes stated that the discussion ranged "from leaving the stance of policy unchanged...to increasing the federal funds rate 50 basis points," officials unanimously decided to stick with a 16th straight rate increase of 25 basis points on May 10, pushing the federal funds rate to 5%. "Given the risks to growth and inflation, Committee members were uncertain about how much, if any, further tightening would be needed after (the May 10) action," according to the minutes of the FOMC meeting. FOMC members "expressed some concern" about "upside risks" to inflation, according to the minutes, and judged that rising inflation expectations "warranted close monitoring." Still, officials concluded that "while worrisome," the rise in inflation expectations "was relatively small" and "could well reverse before long." Thus, officials decided to characterize price expectations as "contained" in the FOMC's May 10 statement, as they had in previous policy statements. Reflecting the conflicting signals arising from recent economic data, Fed officials observed at the same time that they "also saw downside risks to economic activity." The lagged effect of previous rate hikes on housing could be larger than expected, the minutes noted. "Still, it seemed most likely that, with modest further policy action, including a 25 basis point firming (on May 10), growth in activity would moderate gradually over coming quarters, pressures on resources would remain limited, and core inflation would stay close to levels experienced over the past year," the minutes stated.

To: Tommaso who wrote (51910)	5/31/2006 3:49:49 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Immigration reform: Building costs could soar Up to 40% of home building is done by undocumented aliens. But no one's talking about what a crackdown could do to new home costs. (FORTUNE Magazine) - For the home building industry, the immigration debate raging in Washington is anything but abstract. It's the biggest issue nobody wants to talk about. Frank Fuentes, president of the Hispanic Contractors Association, queried his 20 largest member firms about speaking with FORTUNE, and not one was willing. "They're scared to death of being raided," says Fuentes. By FORTUNE's estimate, up to 40 percent of new-home construction in the U.S. is being done wholly or partly by undocumented immigrants. Fuentes suspects the percentage in his home state of Texas is closer to 80 percent. According to a study by the Pew Hispanic Center, 36 percent of insulation workers, 29 percent of roofers, and 28 percent of drywall installers are "unauthorized workers." Big builders don't employ construction workers, legal or illegal. They hire subcontractors that in turn hire the workers who do the actual sawing and hammering. "The entire home building business is outsourced," says A.G. Edwards analyst Greg Gieber. It's unclear whether this setup will protect builders should the feds start enforcing immigration laws more vigorously. In May, Fischer Homes, a leading builder in Kentucky and Indiana, was raided by U.S. Immigration and Customs Enforcement (ICE), and four Fischer supervisors were charged with harboring illegal aliens. Court papers filed by ICE accuse Fischer of using subcontractors "to provide a layer" between it and some 75 illegal workers. That layer, the feds contend, "does not relieve Fischer of the responsibility to ensure that their contractors are employing a legal work force." A crackdown on undocumented workers would shrivel an already tight construction labor market. Lee Wetherington of Lee Wetherington Homes in Sarasota, Fla., estimates that 70 percent of the workers employed by his subcontractors are Hispanic immigrants. "If for any reason we lose that work force, you're going to see the time required to build a house double or triple and the cost of new homes increase 30 to 40 percent," Wetherington says. If developers find they can't pass along those costs, they may pull back on construction - and fewer new homes could ultimately boost prices of existing homes. Wetherington insists that there just aren't enough native-born workers available to meet demand and points to Sarasota County's 2.3 percent unemployment rate. His company built 300 homes last year. Without immigrant workers, "we'd have been lucky to build 75," he says. Wetherington does not know how many of those workers are undocumented, but he suspects it's the majority. He recalls an incident last year when the arrival of workers' comp officials spooked laborers into thinking an immigration raid was underway. "Everyone scattered," he says. "The entire site just cleared out." money.cnn.com