Transcripts of the monetary policymaking body of the Federal Reserve from 2002–2008.

Thank you, Mr. Chairman. I’m going to be quite brief. My contacts in the transportation industry are giving off some very mixed signals. UPS is investing heavily in capacity expansion. They have a problem in expanding capacity because they traditionally do it by buying used passenger aircraft. There are very few of these large aircraft around. They are expecting a busy holiday season.

My contact in the trucking industry says that his firm is now contracting. They have canceled orders for heavy trucks, the rest of them for delivery this year, and I found these numbers quite interesting. He gave me the heavy truck purchases; these are the big, over-the-road, heavy trucks. I will read you the numbers from 2003 through 2006: 2,825; 3,377; 2,424; and 2,672. Their planned truck purchases for next year are 250, and they have canceled the orders for the rest of this year. So the contraction is dramatic, and they have actually been reducing capacity.

My Wal-Mart contact said that it’s a bit hard to read the most recent data. They work entirely on a year-over-year basis. Last year was heavily distorted by the hurricane season, and he said that the latest weekend was a bit disappointing. The paycheck cycle that they look at to understand their customers’ liquidity situation is very muted, apparently with lower gasoline prices taking pressure off the budgets of many of their customers. He said that, for the first time he can remember, they have dropped the construction of new stores; they’ve actually canceled seven or eight projects because of high construction cost increases, which have been running in the neighborhood of 15 percent year over year. They are having no problem in finding labor, and he is not reporting any particularly great price pressures. I had already commented earlier about my concern about what these employment numbers are going to mean, and so I won’t repeat that point. Thank you.

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