“Your big opportunity may be right where you are now.” -Napoleon Hill
Weekly Economic Calendar
Monday July 24th 2006 - Friday July 28th 2006 Date ET Release Consensus Prior
Jul 25
10:00
Consumer Confidence
104.8
105.7
Jul 25
10:00
Existing Home Sales
6.60M
6.67M
Jul 26
10:30
Crude Inventories
NA
151K
Jul 26
14:00
Fed’s Beige Book
Jul 27
08:30
Durable Orders
1.7%
-0.2%
Jul 27
08:30
Initial Claims
NA
304K
Jul 27
10:00
Help Wanted Index
33
33
Jul 27
10:00
New Home Sales
1175K
1234K
Jul 28
08:30
Chain Deflator-Adv.
3.7%
3.1%
Jul 28
08:30
Employment Cost Index
NA
0.6K
Jul 28
08:30
GDP-Adv
3.1%
5.6%
Jul 28
09:50
Mich Sentiment-Rev.
83.0
83.0
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The question is not whether or not the U.S. Federal Reserve Bank will cut its benchmark lending rate today, but if in fact the cut will have any impact on our wounded economy.
Whether the cut is .25 or .75 points – either of which would bring the rate to an all-time low, economists fear that the benefits simply won’t trickle down the consumer. Recent rate cuts have done nothing to boost the consumer credit market because given current economic conditions, the banks that aren’t going under find that issuing consumer loans at anything else than a premium is far too risky.
A great example of this is the current market for auto loans. Typically influenced by the prime rate, which was roughly 4%, Monday, the interest for a 48-month new car loan is 6.8%.
With Americans now hoarding their money and growing increasingly content with simply not losing their hard-earned greenbacks, the Fed may need to expend some of its “extra ammunition” in addition to its imminent rate cut to get consumers to start spending again.
So, what happens when the rate hits zero and its back to the drawing board for Big Ben and his crew? Here’s a great report written by Ben Bernanke himself on potential strategies for monetary policy when the key rate hits zero.
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