The sentiment of the committee continues to remain cautious with respect to future inflation potential. In reviewing some of this material, it appears inventories are building up as some moderation in consumer spending is being seen in the third quarter. If this slowdown is due to six increases in interest rates, higher energy prices, or financial reliquification by the consumer, only time will tell.
Consumer confidence remains high and future expectations are also positive.
As long as employment remains tight, some constraint in growth should develop unless productivity increases from its current record level. For now, until the election, unless some abnormality strikes, the economy should remain on a positive footing with the Federal Reserve remaining on the sidelines. With some signs of economic moderation and the Federal Reserve on the sidelines, equity prices came out of their doldrums and generated one of their better monthly performances. With near term interest rate clarity, stronger earnings, and a lessening fear that a slowing economy would not create higher inflation, confidence was reestablished. The technology and financial issues led the way.