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In the News This Week

At this week’s FOMC meeting, the Federal Reserve dropped its promise to keep interest rates near zero for a “considerable time”, but in a new twist added language saying that the committee can be “patient” before starting to raise rates. The Fed stated that this new language is “consistent” with its “considerable time” pledge. In a press conference following the announcement, Fed Chair Janet Yellen said that “we think it unlikely that…we will see conditions for at least the next couple of meetings that will make it appropriate for us to decide to begin normalization”.

On the upside, industrial production rose 1.3% in November – the largest percentage increase since May 2010. Manufacturing output gained 1.1%, output of consumer goods rose 2.5%, and utilities output grew 5.1% on cold weather. Capacity utilization rose to 80.1%, the highest level since March 2008.

Construction started on new homes slowed 1.6% in November to an annual 1.03 million unit pace, with the decline led by single-family homes. Starts for single-family homes fell 5.4% from October’s pace – which was the fastest since 2008.

In spite of that dip, home builders are remaining optimistic: the National Association of Home Builders Index ticked down one point for December, but held near the nine-year high reached a few months ago.


Consumer prices fell in November by the most in almost six years: the cost of living declined .3%…the biggest decline since December 2008, led by plunging fuel prices. Energy costs decreased 3.8%, driven by a 6.6% drop in gasoline – the biggest drop since December 2008.

The average cost of gasoline fell to $2.51 a gallon on Tuesday – the cheapest since 2009, and down from this year’s high of $3.70 in April, according to AAA.


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