Fed's Yellen Sees `Significant Downward Pressure' on Economy From Housing

[Purveyor]

Source: Bloomberg News

Sept. 10 (Bloomberg) -- Federal Reserve Bank of San Francisco President Janet Yellen said the U.S. economy is under ``downward pressure'' from the turmoil in credit and housing markets.

``It is critical to take a forward-looking approach -- gauging the effects of recent developments on the outlook, and, importantly, the risks to that outlook,'' Yellen said in a speech to a conference in San Francisco. Declining home prices and rising unemployment may cause ``significant'' risks to consumer spending, she said.

Yellen noted that investors increased bets that the Fed will reduce interest rates next week, with at least 0.75 percentage point of cuts by year-end. In a speech earlier today, Atlanta Fed President Dennis Lockhart declined to repeat remarks he made just four days ago that there weren't ``conclusive'' signs of economic weakness.

``I see significant downward pressure based on recent data indicating further weakening in the housing sector and the tightening of financial markets,'' Yellen said at the annual meeting of the National Association for Business Economics. Higher interest rates and ``tighter terms'' on home loans may also lead to cutbacks in consumer spending, she said.



Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=aAO4erzDZQX8&refer=home

[Zenlitened]

1. These Fed talking heads are not analysts in any useful sense. They are LAGGING INDICATORS.

Federal Reserve Bank of Atlanta President Dennis Lockhart today (Monday):

"Last Thursday, I said in a speech that I have not seen conclusive signs of weakness in the broader economy," said Lockhart in prepared remarks in Atlanta today. "Friday's data, however, shows employment was beginning to soften back in June. This news should be evaluated with recently positive reports in retail sales."

Link:
http://www.bloomberg.com/apps/news?pid=20601103&sid=aoH8sRs4ZNR8&refer=news

[damntexdem]

2. Does "significant downward pressure on the economy" mean that:

1) there will be trickling up of poverty?
2) a lowered tide will ground all boats?
or
3) this time around, the soup lines will be catered by Halliburton?