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[FOMC Parse] Nowhere To Go, Although Badness Troughs

The Federal Open Market Committee cut the federal funds rate another 25 basis points [1] to 2%. The WSJ breaks out the announcment FOMC statement in a feature called Parsing The Fed [2].

Information received since the Federal Open Market Committee met in March indicates that the economy has continued to contract, though the pace of contraction appears to be somewhat slower. Household spending has shown signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Weak sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories, fixed investment, and staffing.

With talk of green shoots [3] and everyone digging hard to find silver linings, the Fed announcement was consistent with other news as of late. In other words:

Things are getting worse but not as fast as before.

I’ll take that.

GDP was -6.1% [4]however consumer consumption is up since January which suggests this may be the trough of its decline. The recent Case Shiller index results brought similar comments about housing [5], that the worst may be over but demand and prices are still falling and have more to go.