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Recent Economic News Articles

NY Times 2/11/04 - Federal Reserve Chairman Alan Greenspan said Wednesday the U.S. economy has turned the corner to vigorous growth but that policy-makers can be patient about interest-rate rises, though not forever.

"Last year appears to have marked a transition from an extended period of subpar economic performance to one of more vigorous expansion," Greenspan said in testimony prepared for delivery to the House Financial Services Committee. "Looking forward, the odds of sustained robust growth are good, although as always, risks remain."

The Fed chief warned of both potential long-term and short-term risks from failing to get huge government deficits under control. He also said "chronic concern" about a possible spike in energy prices was another economic danger, and that for Fed policy-makers, a continuing worry was that their policy could become "improperly calibrated" to economic developments.

NY Times 2/12/04 - Alan Greenspan, the chairman of the Federal Reserve, gave an upbeat outlook for the economy on Wednesday and signaled that the central bank would keep interest rates low for at least the next few months.

Presenting his semiannual report on monetary policy to a House committee, Mr. Greenspan said that economic growth could reach 5 percent this year, that unemployment would decline slightly and that inflation appeared set to remain very low.

But he also warned about the rapidly rising federal budget deficit, saying that the prospect of big shortfalls for the foreseeable future could lead to higher interest rates in the near future and bigger fiscal problems as the baby boom generation begins to reach retirement age in the next decade.

For investors, Mr. Greenspan offered hints that the Fed was not yet ready to start raising short-term interest rates from their current level of 1 percent.   

NY Times 2/20/04 - The biggest jump in energy costs since the start of the Iraq war stung motorists and people heating their homes in January. From an economic perspective, though, the overall inflation picture still looked good.

The Consumer Price Index, the government's most closely watched inflation gauge, rose by 0.5 percent, more than double December's 0.2 percent increase, the Labor Department reported Friday.

Much of the January increase was attributed to sharply higher energy prices, reflecting a cold snap in parts of the country; strong global demand; and tight supplies, economists said.

Excluding energy and food prices, which tend to swing widely from month to month, the core rate of inflation increased by a mild 0.2 percent in January, up from a 0.1 percent increase in December but suggesting that prices for many goods and services remain fairly stable.

For the 12 months ended in January, consumer prices were up by just 1.9 percent. Core prices, excluding energy and food, went up by an even smaller 1.1 percent, continuing the slowest pace in more than four decades.        

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SEC Expected to Modify Rule on Routing Orders
Electronic Markets Could Get More Trades

The Securities and Exchange Commission is expected to give preliminary approval Tuesday to rule changes that could alter the way stocks are traded and shift the competitive landscape for the New York Stock Exchange and its all-electronic competitors.

Agency officials said SEC commissioners probably will approve a change that would allow markets defined as "fast" to ignore slightly better prices quoted by markets defined as "slow." Currently, the trade-through rule requires that orders in New York Stock Exchange-listed stocks be routed to the market quoting the best price.

In addition to allowing fast markets to ignore prices on slow markets, the commission is likely to endorse giving investors the choice of bypassing the trade-through rule entirely. Any changes approved Tuesday will be subject to a public comment period of 60 to 90 days.

The proposed rule change would allow market participants to ignore the trade-through rule entirely if a "fully informed principal" gives consent on a trade-by-trade basis.

Institutions such as mutual funds would qualify as principals under the rule and could thus opt out of the trade-through rule. Individual investors would be required to give their brokers permission on each trade to bypass the rule.

Any change to the rule is expected to cut into the NYSE's 80 percent market share in trading of its listed stocks and put pressure on the exchange's floor-based system.
By Ben White, Washington Post