THE FRENCH ARE TRUELY UNIQUE
what would happen if 11,435 people died in two weeks from heat in this country. 9/11 was about 3,000 people. SARS was a handful. why didnt the french help these people? how could they have allowed this type of tragedy to happen? how could they have not helped one another and made sure there neighbors or relatives weren't frying to death during the terrible heatwave? what is wrong with these people?
as i read about the french heatwave, i was amazed at the blatent disregard for community and family that must exist for this type of thing to happen. whenever a bad storm hits the united states from ny to la chicago to dallas, friends & family call or email to find out how they are and emergency response teams are sent to help the people who can't help themselves. in france, the heat was historical and it lasted weeks and these people didn't check on one another? what were they doing?
i could understand some beach days or wear shorts to work day, but not checking on the elderly or the sick? if that happened for 1 day in NYC thousands of people would die!
all i have to say is that their blatant disregard for human life and compassion is just plain disgusting and borders on criminal. i'm glad i'm an american.
have a grateful day!
larry
Friday, August 29, 2003
JOB"LOSS" RECOVERY
since the recession ended in march 2002 the labor force has declined by nearly 1.5 million jobs. in fact, in the past 3 months, during what has been unambiguously described as an economic recovery, approximately 400,000 of those jobs were lost. economists and wall street strategists have made it perfectly clear that there is nothing wrong with continued job losses, as the job market is a 'lagging' indicator and will pick up well after the recovery is underway. yet some do say a stabilizing job market would make them feel much more confident in the recovery.
in most of the commentary about the recovery and the continued problems in the jobs data, the optimists use the term "jobless" recovery, which implies that the recovery is underway, yet no jobs are being created. as noted in the title of this piece, i think a better description of the recovery would be a "jobloss" recovery. as the term implies, this recovery, if it indeed a recovery, is not only not creating jobs but is being fostered and supported by a REDUCTION in jobs. in fact, while jobs continue to be eliminated by corporations, thousands of the discouraged unemployed are leaving the search altogether as they cant find jobs, even after 2 extensions of government unemployment benefits. those benefits are about to end and the employment difficulties seem far from over.
if in fact the recovery is underway, then jobs MUST start to be created in order for the economy to stay in the recovering mode. most agree that the recovery has been bouyed by low interest rates, 2 historically large federal tax cuts, huge government spending, enormous corporate restructurings and write-offs (the famed 1 time charges that have been many more than 1 time), continued cost cutting and all sorts of other "propping policies". all of those efforts will certainly help corporations fix there business models, but none will assist the unemployed find jobs. job creation needs to follow or else another leg down will be made as consumers will not be able to stay with the economic recovery program.
no economic recovery has seen this type of employment market and been able to sustain itself. companies continue to cut costs and jobs in order to align costs and production with demand. as with the historic downturn and the 'new' enviroment we live in, i am sure this time will be different. how it will be different is yet to be seen. my best guess is that it will be different in a very negative way.
have a great day!
larry
since the recession ended in march 2002 the labor force has declined by nearly 1.5 million jobs. in fact, in the past 3 months, during what has been unambiguously described as an economic recovery, approximately 400,000 of those jobs were lost. economists and wall street strategists have made it perfectly clear that there is nothing wrong with continued job losses, as the job market is a 'lagging' indicator and will pick up well after the recovery is underway. yet some do say a stabilizing job market would make them feel much more confident in the recovery.
in most of the commentary about the recovery and the continued problems in the jobs data, the optimists use the term "jobless" recovery, which implies that the recovery is underway, yet no jobs are being created. as noted in the title of this piece, i think a better description of the recovery would be a "jobloss" recovery. as the term implies, this recovery, if it indeed a recovery, is not only not creating jobs but is being fostered and supported by a REDUCTION in jobs. in fact, while jobs continue to be eliminated by corporations, thousands of the discouraged unemployed are leaving the search altogether as they cant find jobs, even after 2 extensions of government unemployment benefits. those benefits are about to end and the employment difficulties seem far from over.
if in fact the recovery is underway, then jobs MUST start to be created in order for the economy to stay in the recovering mode. most agree that the recovery has been bouyed by low interest rates, 2 historically large federal tax cuts, huge government spending, enormous corporate restructurings and write-offs (the famed 1 time charges that have been many more than 1 time), continued cost cutting and all sorts of other "propping policies". all of those efforts will certainly help corporations fix there business models, but none will assist the unemployed find jobs. job creation needs to follow or else another leg down will be made as consumers will not be able to stay with the economic recovery program.
no economic recovery has seen this type of employment market and been able to sustain itself. companies continue to cut costs and jobs in order to align costs and production with demand. as with the historic downturn and the 'new' enviroment we live in, i am sure this time will be different. how it will be different is yet to be seen. my best guess is that it will be different in a very negative way.
have a great day!
larry
Wednesday, August 27, 2003
FINDING INFLATION in a deflationary cycle
with all the recent talk of deflation, its not that hard to find things that are going up in price. home prices, energy costs, insurance premiums, and healthcare costs all are rising. the reasons for the rise in each of these four areas is different, but an important point is that none of the reasons have anything to do with a strong economy. the reason thats important is that normally, prices rise due to strong demand and/or economic growth. that allows companies to have pricing power. that creates an enviroment where companies dont have to compete ferociously for business or market share, because as the economy grows, demand grows and prices can rise. what is happening in each of the above mentioned areas is very different from a strong economy.
lets start with housing. over the last 2 years, interest rates have been lowered and that makes it less expensive to 'carry' or finance the purchase of a home, even if the price of that home is raised. when interest rates move lower it costs less to pay for an asset that is financed, especially if you can finance 80-90% of the purchase price. that allows the property value to rise while the cost to carry it stays the same or goes down. home prices have not necessarily risen due to demand, as much as demand has risen due to the lower cost to own a home. so prices have been able to rise even while the cost to own a home has declined.
a similar phenomenom has occured with automobiles. the 0% financing deals make it less expensive to buy the cars even though prices have remained fairly stable. in fact, automobile companies have been quietly raising prices on the cars they sell, yet with the 0% deals, it seems less expensive to buy a new car since the financing deals are so great which makes the payments lower.
the next area that has seen inflationary forces is the cost of energy. oil, gasoline, & natural gas prices have all risen steadily over the past year. the reasons for the rise in energy costs dont matter except for the fact that none of the reasons include strong demand due to a strong economy. oil prices are up due to geo-political factors as well as supply problems. gasoline prices are up due to oil prices being up and supply and demand issues, most not due to a strong economic rebound. and natural gas has its own issues, some include more demand due to conversions that took place for companies and consumers wanting to move away from a dependence on oil.
the other 2 areas where inflation is prevalent is insurance and healthcare. one of which has an effect on the other. healthcare providers are paying more for insurance and are passing those costs along to consumers. insurers are charging more due to higher claims and more liabilities due to natural disasters which continue to occur at an ever increasing pace and with ever increasing claims. more disasters and higher costs to rebuild the destruction, costs insurers more than they are prepared for. also lawsuits run amok have caused insurers to have to payout more than in the past. as for healthcare costs, we are living longer and having ourselves repaired and improved more and more. as that continues and our society ages, claims will continue to rise and the costs will as well.
all these inflationary forces do not help the economy. each of them is a 'drag' on growth. whats worse is that the deflation that is so prevalent in other areas i.e. technology, furniture, appliances, food, clothing, etc. is effecting businesses profits and enticing consumers to keep spending. most of the spending is being supported by money they are pulling from their homes as homeowners continue to refinance and pull cash out of their ever rising home values. if the deflation starts to hit that part of the economy, homeowners will all go 'upside down' very fast. that in turn will create a deflationary cycle in the most valuable and important asset most of us own.
have a grateful day!
larry
with all the recent talk of deflation, its not that hard to find things that are going up in price. home prices, energy costs, insurance premiums, and healthcare costs all are rising. the reasons for the rise in each of these four areas is different, but an important point is that none of the reasons have anything to do with a strong economy. the reason thats important is that normally, prices rise due to strong demand and/or economic growth. that allows companies to have pricing power. that creates an enviroment where companies dont have to compete ferociously for business or market share, because as the economy grows, demand grows and prices can rise. what is happening in each of the above mentioned areas is very different from a strong economy.
lets start with housing. over the last 2 years, interest rates have been lowered and that makes it less expensive to 'carry' or finance the purchase of a home, even if the price of that home is raised. when interest rates move lower it costs less to pay for an asset that is financed, especially if you can finance 80-90% of the purchase price. that allows the property value to rise while the cost to carry it stays the same or goes down. home prices have not necessarily risen due to demand, as much as demand has risen due to the lower cost to own a home. so prices have been able to rise even while the cost to own a home has declined.
a similar phenomenom has occured with automobiles. the 0% financing deals make it less expensive to buy the cars even though prices have remained fairly stable. in fact, automobile companies have been quietly raising prices on the cars they sell, yet with the 0% deals, it seems less expensive to buy a new car since the financing deals are so great which makes the payments lower.
the next area that has seen inflationary forces is the cost of energy. oil, gasoline, & natural gas prices have all risen steadily over the past year. the reasons for the rise in energy costs dont matter except for the fact that none of the reasons include strong demand due to a strong economy. oil prices are up due to geo-political factors as well as supply problems. gasoline prices are up due to oil prices being up and supply and demand issues, most not due to a strong economic rebound. and natural gas has its own issues, some include more demand due to conversions that took place for companies and consumers wanting to move away from a dependence on oil.
the other 2 areas where inflation is prevalent is insurance and healthcare. one of which has an effect on the other. healthcare providers are paying more for insurance and are passing those costs along to consumers. insurers are charging more due to higher claims and more liabilities due to natural disasters which continue to occur at an ever increasing pace and with ever increasing claims. more disasters and higher costs to rebuild the destruction, costs insurers more than they are prepared for. also lawsuits run amok have caused insurers to have to payout more than in the past. as for healthcare costs, we are living longer and having ourselves repaired and improved more and more. as that continues and our society ages, claims will continue to rise and the costs will as well.
all these inflationary forces do not help the economy. each of them is a 'drag' on growth. whats worse is that the deflation that is so prevalent in other areas i.e. technology, furniture, appliances, food, clothing, etc. is effecting businesses profits and enticing consumers to keep spending. most of the spending is being supported by money they are pulling from their homes as homeowners continue to refinance and pull cash out of their ever rising home values. if the deflation starts to hit that part of the economy, homeowners will all go 'upside down' very fast. that in turn will create a deflationary cycle in the most valuable and important asset most of us own.
have a grateful day!
larry
Friday, August 22, 2003
BLUE BEAR
i am and have been very "un"constructive on the economy and the equity markets for some time now. in fact, i believe we are in the 2-3rd year of what will be looked back on as the "2nd great depression" that could last for a other 3-7 years. the good news is i was bearish starting from the end of 2001, so i was correct and did well for quite sometime. the bad news is i have remained bearish during the recent surge and it hasnt been fun or profitable.
so heres my current connundrum. it seems very obvious to me that nothing much has changed in the "real" economy for most people/businesses, and in fact many of the "critical" issues, i.e pension problems, over-capacity in almost every industry, high corporate and personal debt levels, record high default/bankruptcy rates, airline industry distress, auto industry problems, weak int'l economies (germany, france, italy and one other are in technicalrecessions), high energy costs (oil $31/brl & natural gas $5/btu), employment declines continuing as we export jobs to china & india...now even including white collar jobs, dis- or deflation, ballooning FED deficit, growing trade deficit, baby boom retirement wave wave upon us, war in iraq, afghanistan, & on terror, etc, etc, have not improved at all.
even with numerous band-aides and anesthetics prescribed by the FED and the president, none of the underlying issues have been resolved, and the negative consequences have only been postponed for a later date, presumably sometime after bush gets re-elected.
in fact, much of the recent "good mood" has been a direct result of the stock market rally. which i guess should have been obvious as every single strategist and economist called the turn in such perfect harmony. that would include the recent surge in M&A activity, investor sentiment, consumer sentiment, retail spending, smiley faces, more cautiously optimistic CEO's. unfortunately, i thought fundamentals and reality stilled mattered but i was proven very wrong. my guess is that i won't be wrong for very much longer.
whats also obvious is that the stock market cannot hold this all together just by being UP. the whole thing smacks of "manipulation" coordinated by the federal government. They "reflate" and throw all this "liquidity" at the economy. force banks to lend regardless of risk, return or return of capital, and HOPE that time heals all wounds of the bubble and the broken economy.
its hard not to sound disgruntled but as a bear, i am that way alot. you know the deal, nobody likes a bear. i feel like there is a conspiracy going on. everybody wants stocks to go up and wall street and the government are just fine with that. up is good and down is bad. yet we all should remeber this.
all great bear markets have equally sensational rallies that 'reconvince' the masses to believe again. its just part of the cycle of fear and greed. its now pretty obvious that too much, got too good, too fast.
they'll call it a correction. they'll tell you it had to pullback after such a strong rally. the gurus on the stock market infomercials will hail it as a great buying oppportunity in the newly started bull market. don't believe them and take back your capital. if you don't the market will swallow it up again in a continuation of the greatest bear market in history.
have a grateful day!
larry
i am and have been very "un"constructive on the economy and the equity markets for some time now. in fact, i believe we are in the 2-3rd year of what will be looked back on as the "2nd great depression" that could last for a other 3-7 years. the good news is i was bearish starting from the end of 2001, so i was correct and did well for quite sometime. the bad news is i have remained bearish during the recent surge and it hasnt been fun or profitable.
so heres my current connundrum. it seems very obvious to me that nothing much has changed in the "real" economy for most people/businesses, and in fact many of the "critical" issues, i.e pension problems, over-capacity in almost every industry, high corporate and personal debt levels, record high default/bankruptcy rates, airline industry distress, auto industry problems, weak int'l economies (germany, france, italy and one other are in technicalrecessions), high energy costs (oil $31/brl & natural gas $5/btu), employment declines continuing as we export jobs to china & india...now even including white collar jobs, dis- or deflation, ballooning FED deficit, growing trade deficit, baby boom retirement wave wave upon us, war in iraq, afghanistan, & on terror, etc, etc, have not improved at all.
even with numerous band-aides and anesthetics prescribed by the FED and the president, none of the underlying issues have been resolved, and the negative consequences have only been postponed for a later date, presumably sometime after bush gets re-elected.
in fact, much of the recent "good mood" has been a direct result of the stock market rally. which i guess should have been obvious as every single strategist and economist called the turn in such perfect harmony. that would include the recent surge in M&A activity, investor sentiment, consumer sentiment, retail spending, smiley faces, more cautiously optimistic CEO's. unfortunately, i thought fundamentals and reality stilled mattered but i was proven very wrong. my guess is that i won't be wrong for very much longer.
whats also obvious is that the stock market cannot hold this all together just by being UP. the whole thing smacks of "manipulation" coordinated by the federal government. They "reflate" and throw all this "liquidity" at the economy. force banks to lend regardless of risk, return or return of capital, and HOPE that time heals all wounds of the bubble and the broken economy.
its hard not to sound disgruntled but as a bear, i am that way alot. you know the deal, nobody likes a bear. i feel like there is a conspiracy going on. everybody wants stocks to go up and wall street and the government are just fine with that. up is good and down is bad. yet we all should remeber this.
all great bear markets have equally sensational rallies that 'reconvince' the masses to believe again. its just part of the cycle of fear and greed. its now pretty obvious that too much, got too good, too fast.
they'll call it a correction. they'll tell you it had to pullback after such a strong rally. the gurus on the stock market infomercials will hail it as a great buying oppportunity in the newly started bull market. don't believe them and take back your capital. if you don't the market will swallow it up again in a continuation of the greatest bear market in history.
have a grateful day!
larry
Thursday, August 14, 2003
FED likes rates unchanged...MARKET don't!
(mini-me likes chocolate...scottie don't!)
the federal reserve left interest rates unchanged at 1% after their last meeting. since that meeting ended, interest rates have risen by about 0.25%. in fact, since the meeting they held in june when they lowered interest rates by 0.25% to the current 1% level, interest rates on the 10 year treasury have risen from 3.10% to 4.55% or 1.45% in absolute terms and by almost 50% in relative terms. talk about the law of unintended consequences.
the FED has gone to great stakes to assure the markets that they will leave interest rates at the current low levels until the economic recovery has firmly taken hold. its clear that they feel it is important to keep an accomodative monetary stance in order to allow the economy to get back on a growth path that is robust and sustainable.
measuring by the back-up in rates, the bond market doesn't feel the same way. and if the market is not cooperative, it seems clear that the FED has lost its power and the market forces are in firm control of where interest rates will be. there are a number of reasons that could be the cause of this disparity, but the only thing that really matters is that rates are higher which will slow growth just as we start to take hold of the economic recovery.
the FED seemed to feel that rates needed to remain low in order to sustain the economic stability. so why are the markets challenging that? this is a question that will be answered over the next few weeks or months.
have a grateful day!
larry
(mini-me likes chocolate...scottie don't!)
the federal reserve left interest rates unchanged at 1% after their last meeting. since that meeting ended, interest rates have risen by about 0.25%. in fact, since the meeting they held in june when they lowered interest rates by 0.25% to the current 1% level, interest rates on the 10 year treasury have risen from 3.10% to 4.55% or 1.45% in absolute terms and by almost 50% in relative terms. talk about the law of unintended consequences.
the FED has gone to great stakes to assure the markets that they will leave interest rates at the current low levels until the economic recovery has firmly taken hold. its clear that they feel it is important to keep an accomodative monetary stance in order to allow the economy to get back on a growth path that is robust and sustainable.
measuring by the back-up in rates, the bond market doesn't feel the same way. and if the market is not cooperative, it seems clear that the FED has lost its power and the market forces are in firm control of where interest rates will be. there are a number of reasons that could be the cause of this disparity, but the only thing that really matters is that rates are higher which will slow growth just as we start to take hold of the economic recovery.
the FED seemed to feel that rates needed to remain low in order to sustain the economic stability. so why are the markets challenging that? this is a question that will be answered over the next few weeks or months.
have a grateful day!
larry
Wednesday, August 13, 2003
UNDERSTANDING THE FEDERAL RESERVE STATEMENTS
today, the federal reserve open market committee met to discuss the state of the economy and to decide if they needed to adjust their stance with regards to monetary policy. interest rates are the key to the whole thing yet what they say, in their all important statement, is much more important than what they do. in fact, the interpretation of what they say or do is even more important than what they actually say or do. FED 101 would be a great course on college campuses. i'm not sure if it would be a business course or an english course, but nontheless a great pre-requisite for anyone who needs to understand the economy or the english language.
with that as the intro to this blog, i'll do my best to decipher exactly what they said and did.
the easy part is that they did not change the FED funds rate of interest charged to banks for overnight lending. easy enough to understand and no interpretation necessary. except for the fact that the FED funds rate is at 45 year lows and has been steadily lowered over the past few years in order to 'prop' up the economy and prevent a deeper economic slowdown or crisis. please note that as many as two of the rate reductions were self proclaimed 'emergency' inter-meeting moves &/or 'insurance' moves to make sure that the economy wouldn't fall back into recession. thus, by leaving rates unchanged, they must feel that the economy continues to need its current accomodative policy stance in order to sustain its recent activity level.
interpretations would vary but its clear that the FED felt that the interest rates needed to be held at the current low level in order to allow the recovery to proceed. other interpretations might be that the FED is continuing to see uncertainties and has concerns about the recovery, so they need to keep money easy. a final interpretation could be that they still don't feel that the economy could handle higher rates and would jeopardize the recovery if rates got rose to normalized levels.
then theres the verbatim statement issued by the FED. this is where it gets complicated. what i will try to do is unravel each sentence in order to break it down into bits of information that a non-fed pro can understand.
it starts with one sentence stating that the FOMC decided to keep its target for the federal funds rate at 1%. simple enough.
the next paragraph states that the committee believes that their "accomodative stance and still robust underlying growth in productivity, is providing important ongoing support to economic activity". it continues by stating that "the evidence accumulated over the intermeeting period shows that spending is firming". that sentence is modified by an evaluation of the labor market, stating that "labor market indicators are mixed". i'm not sure why they modify the spending evaluation with the labor issues, but its probably got something to do with the fact that if people don't have jobs, they spend less. the paragraph ends with the FED pointing out that "business pricing power and increases in core consumer prices remain muted". not knowing exactly what a muted price is i looked up what muted means. encarta had the following definition...understated: subdued and understated rather than forceful or enthusiastic. my take is that businesses cannot raise prices due to fierce competition, which normally is not a good thing.
ready for the 2nd paragraph? "the committe perceives that the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal". interpretation...no call, it could go either way, we just don't know. so these geniuses, with much more information than the other geniuses out there, just don't know if the economy is recovering or not. thats what they said. not me, them!
they continue by stating that "in contrast, the probability, though minor, of an unwelcome fall in inflation exceeds that of a rise in inflation from its already low level". wow. thats some sentence. lets analyze together. 1st paragraph they state that the upside and downside risks to sustainable growth are roughly equal". then they state that in contrast, there is a minor probability for an unwelcome fall in inflation. aside from the fact that it seems like a double negative of sorts, how can there be a fall in an indicator that measures something that goes up? not to get bogged down in semantics, the whole sentence is uninterpretable. but please be advised that they state very clearly, as unusual as it may be, that inflation is already at a low level. and by the way, thats something that the FED has strived to achieve for many years! now they are worried that its a bad thing!!!! are they serious?
the last part of the paragraph states that "the committee judges that, on balance, the risk of inflation becoming undesirably low is likely to be the predominant concern for the forseeable future. in these circumstances, the committee believes that policy accommodation can be maintained for a considerablew period". enough said. they won't raise rates till they can be sure that inflation isn't too "muted" and that the recovery has taken hold...firmly. feel better now?
i know that seems like alot, and i'm sure that is exactly what their intention is, but it does little to explain what is really going on in the most vibrant and resiliant economy in the world. which by the way, is vital to the world economic recovery that is forecast for the second half of this year. by the way, the FED statement is subject to your own interpretation.
have a great day!
larry
today, the federal reserve open market committee met to discuss the state of the economy and to decide if they needed to adjust their stance with regards to monetary policy. interest rates are the key to the whole thing yet what they say, in their all important statement, is much more important than what they do. in fact, the interpretation of what they say or do is even more important than what they actually say or do. FED 101 would be a great course on college campuses. i'm not sure if it would be a business course or an english course, but nontheless a great pre-requisite for anyone who needs to understand the economy or the english language.
with that as the intro to this blog, i'll do my best to decipher exactly what they said and did.
the easy part is that they did not change the FED funds rate of interest charged to banks for overnight lending. easy enough to understand and no interpretation necessary. except for the fact that the FED funds rate is at 45 year lows and has been steadily lowered over the past few years in order to 'prop' up the economy and prevent a deeper economic slowdown or crisis. please note that as many as two of the rate reductions were self proclaimed 'emergency' inter-meeting moves &/or 'insurance' moves to make sure that the economy wouldn't fall back into recession. thus, by leaving rates unchanged, they must feel that the economy continues to need its current accomodative policy stance in order to sustain its recent activity level.
interpretations would vary but its clear that the FED felt that the interest rates needed to be held at the current low level in order to allow the recovery to proceed. other interpretations might be that the FED is continuing to see uncertainties and has concerns about the recovery, so they need to keep money easy. a final interpretation could be that they still don't feel that the economy could handle higher rates and would jeopardize the recovery if rates got rose to normalized levels.
then theres the verbatim statement issued by the FED. this is where it gets complicated. what i will try to do is unravel each sentence in order to break it down into bits of information that a non-fed pro can understand.
it starts with one sentence stating that the FOMC decided to keep its target for the federal funds rate at 1%. simple enough.
the next paragraph states that the committee believes that their "accomodative stance and still robust underlying growth in productivity, is providing important ongoing support to economic activity". it continues by stating that "the evidence accumulated over the intermeeting period shows that spending is firming". that sentence is modified by an evaluation of the labor market, stating that "labor market indicators are mixed". i'm not sure why they modify the spending evaluation with the labor issues, but its probably got something to do with the fact that if people don't have jobs, they spend less. the paragraph ends with the FED pointing out that "business pricing power and increases in core consumer prices remain muted". not knowing exactly what a muted price is i looked up what muted means. encarta had the following definition...understated: subdued and understated rather than forceful or enthusiastic. my take is that businesses cannot raise prices due to fierce competition, which normally is not a good thing.
ready for the 2nd paragraph? "the committe perceives that the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal". interpretation...no call, it could go either way, we just don't know. so these geniuses, with much more information than the other geniuses out there, just don't know if the economy is recovering or not. thats what they said. not me, them!
they continue by stating that "in contrast, the probability, though minor, of an unwelcome fall in inflation exceeds that of a rise in inflation from its already low level". wow. thats some sentence. lets analyze together. 1st paragraph they state that the upside and downside risks to sustainable growth are roughly equal". then they state that in contrast, there is a minor probability for an unwelcome fall in inflation. aside from the fact that it seems like a double negative of sorts, how can there be a fall in an indicator that measures something that goes up? not to get bogged down in semantics, the whole sentence is uninterpretable. but please be advised that they state very clearly, as unusual as it may be, that inflation is already at a low level. and by the way, thats something that the FED has strived to achieve for many years! now they are worried that its a bad thing!!!! are they serious?
the last part of the paragraph states that "the committee judges that, on balance, the risk of inflation becoming undesirably low is likely to be the predominant concern for the forseeable future. in these circumstances, the committee believes that policy accommodation can be maintained for a considerablew period". enough said. they won't raise rates till they can be sure that inflation isn't too "muted" and that the recovery has taken hold...firmly. feel better now?
i know that seems like alot, and i'm sure that is exactly what their intention is, but it does little to explain what is really going on in the most vibrant and resiliant economy in the world. which by the way, is vital to the world economic recovery that is forecast for the second half of this year. by the way, the FED statement is subject to your own interpretation.
have a great day!
larry