Laurence Meyer first explained what he thinks the Fed is seeing in the economy: "Unemployment is a little lower, growth is a little weaker, news on inflation has been relatively mixed – none of it is enough to change the Fed’s message."
Meyer said he feels, things are moving in the right direction. "This (economic slowdown) is a measured and a welcome slowdown that relieves resource utilization pressure. Inflation looks like it moderating. (The Fed) is pretty happy with how things are evolving which is in line with what they expected."
Liesman asked about the weakness in the housing and autos sectors. Meyer responded the point here is that there is concentrated weakness in these sectors. "As long as it doesn’t spill over into other sectors the economy can withstand these drags. It’s a narrowly based decline –of course it bears watching – if it spills over to broader consumer spending (that could raise concerns.) I think the drag from the housing sector should soon be abating."
As for ’07 – Meyer said he expects interest rates will either hold, or they will be tighten. Growth will come back to about 3% in the second quarter. For his closing comment Meyer said- "Give them a gold star!"