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

Thank you, Mr. Chairman. After listening to all kinds of people over the summer, I’ve come to the conclusion that perhaps I should always listen to equal numbers of manufacturers and retirees because manufacturers always want lower rates and retirees always want higher rates. Or maybe better yet, I should just save myself some time and not listen to either group!

Most reports from our directors indicate that not much has changed recently. That’s similar to what Mike Moskow was saying about his District only I didn’t sense that the tone among our directors was quite as negative as I thought Mike was suggesting for his. To me, neither reports of strength nor reports of weakness tended to dominate. But let me note just a few things I heard from directors. A fresh report on the coal industry in the region indicates a stronger demand than had been anticipated earlier, which is due primarily to higher coal consumption by power plants; that business has been very good. The strength I mentioned in the spring in business at roadside hotel chains and family style restaurants continued through the summer, as did the weakness in urban center hotel chains. Employment of unionized truck drivers was reported to have continued to increase in spite of the bankruptcy of Consolidated Freight Company. And sales at the annual September auction of thoroughbreds in Kentucky were even worse than the July auction of colts. We were told that dollar sales were down 40 percent, and it was primarily because Middle East buyers didn’t show up this time. At a recent meeting of our Community Bank Advisory Council, several members described their business customers as being highly liquid. These customers had lines of credit in place, and they had attractive investment opportunities. They simply lacked the confidence to proceed. As one banker put it, “Small businesses are healthy but afraid.”

On the national economy, I want to comment about some cyclical versus secular trends. A former member of our Small Business Advisory Council who runs a metal fabrication company near Lexington, Kentucky, attended a joint board of directors dinner where Governor Olson spoke on September 1l. Actually we were in Covington, Kentucky, so there were a lot of references to what it was like over half a century ago when the Chairman played with a band there. In fact, it was pretty exciting.

Keyboard shortcuts

j previous speech k next speech