Fed"s survey by Claudia Sonea

There have been a lot of changes in the US economy this year and the stock market was constantly sliding from record highs to record losses. The main reasons were housing slump, growing oil prices to above $88 and the dollar's downfall in front of euro. Federal Reserve has the power to change things and put a balance, after 16 August things have brighten a little bit for investors and the stock market is not that volatile. However there is still expected a new rate cut. Fed's Chairman, Ben Bernanke, keeps making statements. After the one made in New York, Monday night, now a new report was released to the press on Wednesday. Still, the report was a breath of fresh air, revealing that despite house problems and credit tightening the economy continued to expand, on a slower rhythm, but it did. The main piece of advice was that companies and people spend and invest at a sufficient pace in order to not disturb the economy. The survey made by Fed and presented, revealed some particular things. First of all, contacts in the industry don't have a good forecast for the future of US economy, while real-estate contacts think housing market will not change any time sooner. Furthermore, firm contacts believe that credit tightening and slowing construction might slow their activity, but keeps an optimistic perspective for the time been. Bernanke said that economy's performance is until now reasonably good and the implications of the credit crunch on the broader economy are still uncertain. Provided that the Fed's next meeting will be on 30-31 October, analysts have different opinions. Some think that due to the government report on the job market that is not that troubled and the retailers make decent sales, the rate will not be changed. Others think that it will make another rate cut in order to accelerate economy's growth. After Fed's survey, many incline to believe the first category. So, employment climate is good, although in some regions its growth has stopped. The Labor Department shows that the unemployment rate rise was balanced by a solid increase in salary. This improved the worst housing crisis in 16 years. However, it is still difficult to acquire a car, a house or anything else due to the credit tightening. Many lenders applied tighten lending standards, especially for real estates. Many people were unable to pay their mortgage or to sell their homes; therefore a new-home construction fell 10.2 percent in September, according to the Commerce Department. On the inflation Fed's survey showed higher prices for food, energy and raw materials. Even though, retailers tried to limit the passing of increased costs to customer, Labor Department revealed a 0.3 percent rise in consumer prices. The information, collected before October 5, for the survey was provided by the Fed's 12 regional banks. Don't go away…it's far from being over.

related story: http://news.yahoo.com/s/ap/20071017/ap_on_bi_go_ec_fi/fed_economy;_ylt=Aj92AnNxqt65GDEyxaBr9_is0NUE

by Claudia Sonea for PocketNews (http://pocketnews.tv)

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