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Weekly Economic Update|Week of May 5th, 2008 Episode
The Federal Open Market Committee lowered the federal funds rate target 25 basis points to 2.00% at their April 29/30 meeting as many analysts expected. The Fed cited "subdued" consumer spending, softening labor markets, and stressed financial markets as the basis for the cut. They also noted that inflation, which was elevated due to higher oil and commodity prices, should moderate in the months ahead. Real gross domestic product (GDP) and employment were the most important economic reports released last week. First quarter real GDP advanced at a slow 0.6% annualized rate; and nonfarm payrolls fell by a smaller-than-expected 20,000 jobs. The financial markets responded positively to this news as all three major indices finished the week higher with the Dow Jones Industrial Average ending above 13,000 for the first time this year. The financial markets also provided good news as oil prices fell for the first time in six weeks and the dollar gained against the euro. Most analysts believe last week's reduction in the federal funds rate target will be the last for the foreseeable future unless the federal stimulus package does not have the expected effect on growth and the economic outlook worsens.
[ Mon, 05 May 2008 00:00:00 GMT ]
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