The fact that the economy continued to demonstrate extraordinary strength last winter and spring was perfectly consistent with past experience. As monetary restraint took hold this summer, the economy became slightly less buoyant and more balanced. Employment growth slowed a bit and housing starts actually fell somewhat. Indeed, one economic indicator after another fell into line showing that the economy was continuing to grow, but at a little bit slower rate than earlier this year. All the while, inflation remained relatively low and stable, reflecting success in the Fed's efforts to achieve this fundamental policy goal.
Monetary policy does affect the new economy after all.