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

Thank you, Mr. Chairman. I want to concentrate my comments on anecdotal information that is very, very recent because the formal data we have now are almost entirely from the period when the war was still in progress. My contacts suggest that there is a more optimistic tone, but I’m wondering whether that optimistic tone reflects more a sigh of relief that the worst didn’t happen rather than any genuine optimism. Everyone emphasizes that they don’t see any evidence in the data right now; there is a sense of greater optimism but nothing actually going on that suggests a pickup.

I talked with my Wal-Mart contact yesterday. It was about 5:00 p.m. on Monday, and as is usual, he had data through a good part of the day already. [Laughter] He said there is no sign of any significant increase in consumer buying. Weekend sales were 2.8 percent above the previous year for comparable stores, and the data so far for Monday didn’t indicate anything new going on. He said that there is no evidence of any postwar bounce in consumer spending on the kinds of items that Wal-Mart sells. There was no weather explanation; weather has been normal in most of the country, including tornadoes in the Midwest at this time of year.

I’ve also been trying to press my contacts on the capital spending outlook. My UPS and FedEx contacts both emphasized that they’re not buying any new aircraft. They are giving up all of the options they had previously to purchase aircraft. My UPS contact made a comment that I thought was rather interesting. UPS is even looking at paying the penalties to give up firm orders because the price of used aircraft has come down so much that it might be cheaper for UPS to go ahead and pay those penalties. Of course, for any one company the purchase of used aircraft is a capital outlay, but it is not an increase in capital spending for the economy as a whole. That may be a point that has more general applicability as we try to interpret anecdotal reports about capital spending going forward because there is an awful lot of idle office space and equipment and so forth. In particular, I’m thinking about structures where from a company’s point of view they are spending more—and they tell us that—but it doesn’t show up for the economy as a whole.

As I look at the national outlook in terms of the actual data, those data are almost uniformly on the weak side with minor exceptions. The positive information is mostly the financial market information—the stock market as well as bond market spreads—and, of course, oil prices also. I think we should all be aware that while a better tone in the securities markets is a positive development, we know that later this week or next week all that could disappear in a flash. The bottom line for me is that there is no sign at all of a postwar bounce in the information that we have. Thank you.

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