CHAIRMAN BERNANKE
We spend a lot of time here at the Board thinking about different plans for refinancing subprime borrowers or other borrowers into sustainable mortgages .
CHAIRMAN BERNANKE
I should be clear -- the Greenbook already incorporates a considerable slowdown in commercial real estate , but that means it will no longer offset the residential slowdown .
VICE CHAIRMAN GEITHNER
24 , VICE CHAIRMAN GEITHNER. , '' Richard , we 've been talking to these people several times a day , and we 'll do so again today .
MR. STOCKTON
We would expect some restraint on consumer lending and consumer borrowing associated with tighter underwriting , so there will be some increase in cost .
MR. STOCKTON
That piece of what we built into the forecast would look to be questionable and might be worth a couple of tenths on the level of GDP next year .
MR. PLOSSER
June employment growth in the region was below trend , but the region 's unemployment rate remains relatively low .
MR. PLOSSER
-LSB- Laughter -RSB- The biggest economic news headlines since our last meeting have focused on the volatility of the financial markets and the repricing of risk .
MR. PLOSSER
Our banking and other business contacts indicate that banks have money to lend to customers with good credit ratings , and so I do n't get the sense that area businesses are facing a credit crunch of the normal type .
MR. PLOSSER
I also have some concern about the empirical ability of core PCE to actually be a very good predictor of headline PCE inflation at the end of the day .
MR. PLOSSER
This suggests to me that what we are seeing in the marketplace -- at least right now but which could change , as we 've all noted -- is a change in the relative price of various measures of types of risk .
MR. PLOSSER
Our Business Outlook Survey indicates that the District 's manufacturing output continued to expand in July , although at a somewhat slower pace than in June .
MR. PLOSSER
I also think that there is some risk of temporary weakness in business fixed investment going forward simply because of increased uncertainty .
MR. PLOSSER
If the equilibrium real rate is lower , holding the fed funds rate constant , of course , would imply an implicit tightening of monetary policy .
MR. PLOSSER
Office vacancy rates in the Philadelphia region remain very low and declining , and rents in office and warehouse spaces remain at a record high .
MR. PLOSSER
They do not understand that our central tendency is an agreement about what our point forecast is but that it may reveal very little or nothing about the degree of uncertainty in our forecasts .
MR. PLOSSER
Credit constraints experienced by the large money center banks have not appreciably affected the banks in our District or their lending practices .
MR. PLOSSER
The Business Outlook Survey 's prices-paid index has risen considerably since the beginning of the year and has doubled since August .
MR. PLOSSER
According to our Business Outlook Survey , manufacturing activity in the District has been increasing at a modest pace for the past few months .
MR. PLOSSER
Turning to the nation , financial market conditions , especially those associated with the big money center banks , have clearly deteriorated in recent weeks .
MR. PLOSSER
Firms continue to report higher health care costs , and at the same time , wages continue to be moderate , they say .
MR. PLOSSER
It 's important to note that , for a good part of the forecast for the fourth-quarter GDP , it 's payback for strong inventories and net export numbers in the third quarter .
MR. PLOSSER
I also am going to cite another statistic from the same survey that President Evans referred to -- Duke University 's CFO Magazine survey .
MR. PLOSSER
As President Poole indicated , credit card delinquencies were up but highly concentrated in California , Nevada , and Florida .
MS. YELLEN
My forecast assumes that the fed funds rate will fall to about 4 1/2 percent in the fourth quarter .
MS. YELLEN
Anecdotal reports from those nearby -- for example , our contacts in banking , housing construction , and housing-related businesses -- suggest significant damage from the temblor .
MS. YELLEN
Similar to the Greenbook , we 've incorporated these financial developments into our projection by revising down our forecast for residential construction and home prices .
MS. YELLEN
We could take a wait-and-see approach to the financial shock , incorporating its impact on our growth forecasts only after we observe its imprint in the spending data .
MS. YELLEN
With respect to economic activity , I 've downgraded my forecast for growth in the fourth quarter by about the same amount as Greenbook and lowered it only marginally , a bit less than Greenbook , in 2008 .
MS. YELLEN
Moreover , banks and other financial institutions are imposing tighter terms and conditions across a broad range of corporate and household lending programs .
MS. YELLEN
As I noted , my forecast assumes that we will plan to ease by around 75 basis points by year-end in line with market expectations .
MS. YELLEN
We see a large drop in house prices as quite likely to adversely affect consumption spending over time through a number of different channels , including wealth effects , collateral effects , and negative effects on spending through the interest rate resets .
VICE CHAIRMAN GEITHNER
25 , VICE CHAIRMAN GEITHNER. , '' I do n't think , Richard , you need to be in a position to offer an opinion on what happened in Bear Stearns in particular .
MS. PIANALTO
The District economy continues to be weighed down by weakness in the housing market , and there is general consensus among my contacts that the housing sector has not yet seen bottom .
MS. PIANALTO
This includes the Cleveland Cavaliers -- -LSB- laughter -RSB- -- a franchise which , as many of you know , experienced a substantial productivity shortfall against the San Antonio Spurs a couple of weeks ago .
MS. PIANALTO
My projection for GDP is slightly stronger than what is seen in the latest Greenbook because of my assumption for slightly stronger growth in potential .
MS. PIANALTO
To date , adverse spillovers from housing to other sectors of the economy have not been observed , although this remains a significant risk to the outlook .