MR. WARSH
That statement of the Greenbook is probably reflected in the data that we 've seen in July and August in terms of the capital markets .
MR. LACKER
This is consistent with the Greenbook 's estimate that residential investment will no longer subtract from real GDP growth after the first half of next year .
MS. YELLEN
In his presentation , David noted the possibility that the growth rate of potential output may be lower than even the downwardly revised estimate in the Greenbook .
MR. KOHN
I suspect it is not as weak as the estimated third-quarter GDP number but is somewhat softer than the labor market indicators , which show no slackening in the pace of demand or decline in resource utilization .
MR. WARSH
My own sense is that continues to suggest good news for the equity markets and good news for corporate profits .
MR. LACKER
BFI spending as a share of GDP is still quite low by historical standards ; and as the Greenbook points out , the fundamentals -- business balance sheets and output growth -- look quite solid .
MR. KROSZNER
-LSB- Laughter -RSB- I hope this does not bode ill for the economy going forward , but I did want to note that one very important change , Mr. Chairman .
MR. WILCOX
11 , MR. WILCOX. , '' Broadly , I do n't disagree that the acceleration in consumer prices is broadly based .
MR. PLOSSER
Indeed , the Greenbook 's baseline forecast of core PCE inflation remains above 2 percent through the end of 2008 .
MR. PLOSSER
If scenario 1 comes to pass and inflation falls faster than suggested by the Greenbook baseline , then we would all breathe easier .
MS. YELLEN
Since our last meeting , the data bearing on the near-term economic outlook suggest both slower economic growth and a bit less core price inflation going forward .
MR. LACKER
The data point to a strong rebound in GDP growth this quarter , perhaps stronger than had been anticipated by the Greenbook and private forecasters .
MS. YELLEN
For example , higher long-term rates could reflect rational market expectations of a significantly stronger domestic economy over the next few years .
MS. PIANALTO
The current Greenbook baseline projection for GDP is even lower than it was at the time of our last meeting because of revisions , as Dave mentioned , to both supply and demand factors .
MR. KOHN
In the staff forecast , residential construction flattens out this year and next , after contributing nearly half a point to GDP growth last year .
MR. STERN
To sum up , my forecast of real activity is for slightly more growth than the Greenbook this year , and there is a wider positive divergence between my forecast and the Greenbook forecast for 2007 .
MR. LACKER
Moreover , the Greenbook forecast now has year-over-year core PCE inflation remaining at 2.2 percent throughout the forecast period .
MS. PIANALTO
That is , I am expecting the Greenbook 's call for moderation in economic growth to result in a little more slack than appears in the Greenbook 's baseline .
MS. PIANALTO
In fact , the Greenbook projections for real GDP now reflect something close to the pessimistic end of where I thought things could be heading .
MR. LACKER
For overall activity , I expect real GDP growth to be somewhat below trend , especially this quarter , but above the Greenbook through the end of next year .
MR. LACKER
I find this Greenbook 's more pessimistic outlook for housing itself plausible , but I 'm still fairly skeptical of large indirect spillover effects on employment or consumption .
MR. KOHN
In sum , Mr. Chairman , I 'm a bit more comfortable with something like the path for the economy and inflation in the Greenbook forecast , but uncertainties are quite high .
MR. HOENIG
Housing markets in the District are cooling , as you 've heard described elsewhere , and illustrate I think a potential downside risk overall .
MS. PIANALTO
At this time , I do not see any signs that the real economy is going to be weaker than projected in the Greenbook baseline , but unfortunately I do not expect an inflation outlook that is much better than the Greenbook baseline either .
MR. STOCKTON
Moreover , inventories of unsold homes remain at a very high level , and sales cancellations have continued to increase .
MS. YELLEN
In the case of housing , we agree with the Greenbook assessment of housing activity and find it quite consistent with the reports of our contacts in this sector .
MS. YELLEN
Finally , as in the discussion we had earlier about the alternative Greenbook scenario , we think inflation may have become less persistent over the past decade , and this is one reason that we 're a bit more optimistic than the Greenbook about the possible degree of disinflation over the next couple of years .
MR. WILCOX
-LSB- Laughter -RSB- In fact , as we reported to the Board yesterday , Friday 's labor market report came in very much as expected .
MR. WILCOX
Turning first to the issue of resource utilization , the clearest indication of our thinking in this regard is that the unemployment rate in the August Greenbook never deviates more than 0.1 percentage point from our forecast in the June Greenbook .
MS. BIES
If you look at the Greenbook , you 'll notice that the financial obligation ratio rose quite substantially in the past six months .
MR. STOCKTON
The bottom line is that our outlook for economic activity has not really changed much from the one presented in the October Greenbook -- or for that matter , the September Greenbook .
MS. YELLEN
The current risks to this scenario are by now a well-known litany -- housing , energy prices , the saving rate , foreign demand , and term premiums .
MS. YELLEN
I would judge that these measures currently fall in a range from a modest amount of slack to a modest amount of excess demand .
MS. YELLEN
The recent sharp rise in oil prices should also put a damper on growth of real income and consumer spending .
MS. YELLEN
These surprises intensify the risk of a sharper slowdown as the lagged effects of our past policy actions come fully into effect .