MR. MADIGAN
As Dave Stockton discussed yesterday in response to a question from Vice Chairman Geithner , the Greenbook projection is a modal forecast .
MR. LACKER
Housing , of course , continues to be the main drag on spending , and the most prominent source of uncertainty about the real outlook .
MR. FISHER
57 , MR. FISHER. , '' Mr. Chairman , at the past few meetings I have spoken about my District as having strong growth .
MR. KOHN
Now , to offset the effects of weakness in wealth from these prices , I had a slight easing of monetary policy this year , next year , and the following year -- 1/4 percentage point each year -- to get that same output .
MR. KOHN
I confess that for ’07 I committed the sin of thinking things were more uncertain than usual , Mr. Chairman .
MR. KOHN
So the damping effect of lower Treasury rates on the cost of conforming housing credit will be held down .
MR. KOHN
Good growth in labor demand could suggest a stronger path for demand and less slack than the staff is estimating .
MR. WARSH
Let me build on a couple of remarks that Vice Chairman Geithner made about risks now in the financial markets .
MR. STOCKTON
As expected , the decline in residential investment took a significant bite out of first-quarter growth , as did net exports and defense spending .
MR. STOCKTON
Private payrolls increased 63,000 in April , and there was a downward revision of 24,000 in February -- leaving the level of employment below that incorporated in the May Greenbook .
MS. YELLEN
Underlying our forecast is the policy assumption that the Committee will cut the funds rate another 25 basis points at this meeting .
MR. HOENIG
I 've been encouraged by the recent inflation data , and I continue to expect inflation to decline over the forecast period .
MS. YELLEN
This adjustment reinforces the work of productivity experts at the Board and elsewhere who had previously found evidence of a slowdown in underlying productivity growth .
MS. YELLEN
The Greenbook has long highlighted , and we have long worried about , the possibility and potential consequences of a broader shift in risk perceptions .
MR. HOENIG
Comparing my views with those in Greenbook , the basic difference appears to be largely in some of the judgmental adjustments in the Greenbook concerning spillovers from the housing and financial stress to consumer spending .
MR. WILCOX
In the `` Alternative Scenarios '' section of the Greenbook , we sketched three situations in which economic activity would be markedly weaker than in the baseline .
MR. STOCKTON
Indeed , I still see the generally firm conditions in labor markets as suggesting some upside risk to our view that the economy is in the process of slowing sharply .
MS. JOHNSON
Our projection for foreign inflation has been revised up just a little in response to the higher level of our path for oil prices .
MR. DUDLEY
Although U.S. inventories remain high relative to the five-year historical average -LRB- as shown in chart 14 -RRB- , this situation has persisted for some time without having a big effect on prices .
MR. STOCKTON
So I do n't think we 're seeing an excess supply of homes that people just wo n't want at current prices , or roughly current prices , but that is a considerable risk .
MR. WILCOX
The data on both new and existing home sales that were released earlier this week were consistent with our Greenbook forecast .
MR. WILCOX
However , the orders and shipments data for March and April -- the latest that were available to us when we were putting together the Greenbook , encouraged us to think that a rebound of at least modest proportions is in train , and this morning 's release came in close to our Greenbook expectations .
MS. MINEHAN
Turning to the nation , I was pleased to see that incoming data validated the substantial pickup in second-quarter growth that we , along with the Greenbook , had forecasted .
MR. STOCKTON
84 , MR. STOCKTON. , `` 3 We left at your place -- and I hope you will find -- a table showing the GDP release numbers relative to the Greenbook forecast that we had .
MS. YELLEN
However , as noted in one of the Greenbook alternative simulations , greater business pessimism about future returns to new capital is also a significant risk .
MS. YELLEN
Overall , I 'm more optimistic regarding inflation than the Greenbook and anticipate that core PCE price inflation will edge down below 2 percent after next year .
MS. YELLEN
On the one hand , the very sluggish real GDP growth in the first quarter gives me pause concerning potential downside risks .
MR. DUDLEY
Nevertheless , the potential gap between market expectations and the Committee 's interest rate expectations may pose a bit of a conundrum for the Committee .
MR. STERN
I thought it was particularly heartening , as noted in Part 2 of the Greenbook , that apparently the inventory overhang in construction supplies and in autos has been worked off , which suggests that we should see improvement in those sectors going forward .
MR. KOHN
I projected output growth at 2 1/2 percent , the unemployment rate at 4 3/4 percent , and core PCE inflation at 1.9 percent .
MS. MINEHAN
Second , I notice that , if you compare the Greenbook GDP forecast with the central tendency of the members of the Committee , growth is a good deal slower -- 0.3 or 0.4 slower , which in this realm is a lot .
MS. YELLEN
Even so , the Greenbook forecasts , and we agree , that other factors will likely offset this acceleration so that GDP will grow slightly below trend in 2007 .
MS. YELLEN
An alternative simulation in the Greenbook illustrates that if spending instead advances in line with income , the unemployment rate would decline noticeably further from a level that is already low .
MR. POOLE
Perhaps what is going on here is simply what is also in the Greenbook 's second-quarter numbers , because the goods part of the economy -- consumption -- is pretty flat .
MR. PLOSSER
The rise in long-term interest rates reflects the market 's upgrading of its assessment of the economy 's strength going forward .