Mr. Chairman, on the national outlook, our view is similar to the Greenbook’s in that we think the expansion has regained some of its traction and will continue as we move forward. Discussions with business contacts throughout our District tend to support this notion as well. For example, most retailers that we’ve contacted in the last few weeks reported that sales have improved in August over earlier in the summer. In addition, the chair of our board, whose firm is in the manufacturing area on a worldwide basis, reported to us just last week that capital spending budgets finally seem to have been, to use his word, “unleashed.” Another director noted that low interest rates and available capital have enabled firms to find capital for acquisition and expansion fairly readily. In our most recent survey of all thirty of our head office and branch directors, about two-thirds of those who expressed an opinion about the next six months—and that was most of them—thought conditions would improve, while about a third thought the economy would just, in their words, “muddle along.” Finally, District hirings continue to exceed layoffs and by a fair margin now. The ratio of announced planned hirings to planned layoffs was 2½ to 1 in the third quarter, greatly surpassing the previous high of 1¼ to 1 earlier in the year.
Based on recent evidence like this and on forecasts by our staff, I believe the most likely outcome is continued good growth in the 3½ to 4 percent range, as suggested by others. The uncertainty seems to center on whether hiring will pick up, and I agree that the most likely outcome is that it will strengthen as we move through the remainder of this year and into next year. On the inflation outlook, it appears that the Committee and others were correct in that the spring increases were temporary and price inflation has settled back to more-modest levels. In that environment, my judgment is that what I would describe as our careful, systematic movement toward a more neutral fed funds rate is serving us well. Thank you.