Tuesday, July 20, 2010

President Jeffrey M. Lacker Economic Outlook, July 2010

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As I type, Apple's earnings are being reported and they beat on both the top and bottom lines...again they sandbagged. Who says the consumer is dead?
The news of late has been that companies are reporting good earnings ..BUT revenues are missing. However, Fed Reserve President Lacker, recently made this commentary on 'pent up demand'.

"The brighter picture is not limited to consumers. Business investment in equipment and software usually displays large swings in recessions and recoveries, and the latest experience fits that pattern very well. After falling at nearly a 15 percent average annual rate during the recession, this investment category grew slowly in the third quarter last year and then rose at a 15.2 percent annual rate in the next two quarters. Again, prudent firms often defer capital spending in recessions, which creates a pent-up demand that boosts spending early in recoveries. And while sales may have fallen in many industries, technology continues to advance, and as a result there's an array of opportunities to deploy new capital to improve business processes. Major upgrades for IT and communications equipment are underway at many firms. So along with most analysts I expect to see robust increases in spending for business equipment and software this year – and beyond."

"Despite these serious policy challenges, however, I remain fundamentally optimistic about the capacity of the American economy to generate sustained improvements in standards of living. Our country has repeatedly demonstrated an unsurpassed ability to generate technological and organizational innovations and deploy them to deliver improved products and services for consumers and businesses. While we have struggled from time to time with economic policy, and no doubt will continue to struggle in the years ahead, that should not distract us from our signal achievements, nor should it dim our hope for the future."

President Jeffrey M. Lacker Federal Reserve Bank of Richmond Economic Outlook, July 2010 >>LINK

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