The Federal Reserve yesterday said that the Recovery Summer hasn’t happened yet:

Information received since the Federal Open Market Committee met in June indicates that the pace of recovery in output and employment has slowed in recent months. Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising; however, investment in nonresidential structures continues to be weak and employers remain reluctant to add to payrolls. Housing starts remain at a depressed level. Bank lending has continued to contract. Nonetheless, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be more modest in the near term than had been anticipated.

So their plan is to issue more debt, basically. Brilliant. And very encouraging to world markets

PARIS (Reuters) – U.S. stock index futures pointed to a lower open on Wall Street on Wednesday, as the Federal Reserve’s gloomier assessment of the economy rattled investors and the central bank’s measures to support the fragile recovery failed to reassure world markets.

At 4:23 a.m. ET, futures for the S&P 500 were down 1.1 percent, Dow Jones futures down 0.97 percent and Nasdaq 100 futures down 1.12 percent.

European stocks were down 0.8 percent in morning trade, led lower by banks such as Societe Generale and UBS , while Japan’s Nikkei index tumbled 2.7 percent, suffering its worst session in nearly a month as a stronger yen deepened worries about the longer-term prospects for Japan’s economy.

The dollar fell to an eight-month low versus the yen on Wednesday as traders pared back on risk following the decision from the Fed to invest proceeds from mortgage backed securities into government debt.

“Mortgage backed securities”

What could possibly go wrong?

One Response to “Underwhelmed”

  1. Yojimbo says:

    What could go wrong!

    They are effectively monetizing our debt now. They are taking the money from the MBs and shifting it into our debt instead of retiring the original purchase bucks and giving the profits to Treasury to reduce the deficit.

    In other news- the trade deficit expanded “unexpectedly”.

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