28 November 2001, 16:42 Fed's Poole: Consumer conf. held up 'pretty well'
ST. LOUIS (Dow Jones)--Consumer confidence has held up "pretty well," and
retail activity, on the whole, has held up "pretty well" said St. Louis Federal
Reserve President William Poole.
Speaking to reporters following a speech Tuesday evening to a Financial
Executive's Institute dinner in St. Louis, Poole said Sept. 11 events affected
retail and airline activity in the immediate aftermath, but that the population
as a whole is gradually moving forward.
He noted that retail sales are down a little, but that October auto sales
were strong, a factor he said should not be dismissed.
Poole noted there's been a shift by consumers to discount stores. Poole said
he's not sure quite what to make of that, but that perhaps it means there's a
willingness to spend and to do so where consumers think they are being more
frugal.
In discussing consumer confidence, Poole reiterated that he doesn't think
that the consumer confidence survey data is a particularly good predictor of
consumption spending. He also reiterated that a better measure of consumer
confidence is housing related activity, such as housing starts and sales,
because those are very large commitments with people putting down money and not
just answering survey questions.
In discussing his view on the Federal Funds rate, Poole said he doesn't think
a person should feel any differently about making a rate move when the Federal
Funds rate is at five as to when it's at two, if a person thinks it will be
constructive for the way in which the economy is functioning.
Poole again said that the Federal Reserve isn't running out of ammunition.
"The only stopping place that I see is zero and if going to zero is
constructive, then we ought to do it," Poole said, adding that that is not a
forecast.
Responding to a question about deflation, Poole noted some prices are going
up, such as college tuition and medical insurance, while productivity gains are
driving other prices down.
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