Once again the economy is in the news this morning. New claims for unemployment are expected to rise, as is the number of people who remain on unemployment. That's the bad news. The good news includes the fact that inflation--measured by the CPI--is virtually nonexistent. Also, inventories are low, meaning factories will have to ramp up production soon. And, building permits are expected to rise about 3.5%. As you know, building permits and new claims for unemployment are leading indicators. CPI and unemployment/employment rates are coincident indicators. And, inventory is a lagging indicator.
In the article referenced below, you will see brief mention of both fiscal and monetary policy, even though those terms are not used. You'll see that "the Fed" sees no reason to change the discount or fed funds rate. You'll also see that fiscal policy, in the form of a tax credit, can help increase demand for housing.
I invite you to read the brief article at the link below. See how the "test world" matches up with the "real world" at:
http://news.yahoo.com/s/ap/20090917/ap_on_bi_ge/us_economy
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