Minutes from the Dec. 11-12 FOMC meeting showed that even as they were preparing new Treasury purchases, “several” FOMC members said it would “probably be appropriate to slow or stop buying well before the end of 2013.” A “few” others were willing to let the program run to the end of the year, while “a few others” didn’t give a time frame.
Policy makers from St. Louis Fed President James Bullard to Eric Rosengren of Boston have said the duration of the program will depend on the economy’s progress and won’t be tied to a calendar date.
Recent reports have highlighted an economy that, while growing at a moderate pace, made steady gains even as U.S. lawmakers wrangled over fiscal policy. Gross domestic product may expand at a 2% pace in 2013 after a 2.3% gain last year, according to the median forecast of economists surveyed by Bloomberg News this month.
Industrial production climbed for a second month in December as demand picked up for business equipment, according to a separate report released by the Fed today.
Payrolls increased by 155,000 workers in December, keeping the unemployment rate at 7.8%, a Labor Department report showed Jan. 4. Retail spending climbed 0.5% in December after a revised 0.4% increase in November.
Another report today showed the cost of living was little changed in December, capping the smallest annual gain in the past decade. The unchanged reading in the consumer price index followed a 0.3% decrease in November, according to Labor Department figures.
At the same time, a report today showed that confidence among homebuilders held in January at the highest level in more than six years, a sign the housing market will probably spur growth in the larger economy. The number of building permit applications issued in November rose to a four-year high, a rebound that bodes well for companies including Los Angeles- based KB Home.
“Housing is becoming a bright spot for the economy,” Jeffrey Mezger, chief executive officer of the Los Angeles-based homebuilder, said on an earnings call Dec. 20. “The industry is once again positioned to play its historical role of being a job creator and leading the national economy into a full recovery.”