EC 304

Fall 2002

Assignment #3

Focusing on the retail sales and consumer sentiment reports released last week (September 13), along with data released this week including business inventories (September 16), industrial production (September 17), consumer prices (September 18), and housing starts and permits (September 19), discuss what these reports show and whether they alter your view of where the economy is heading. You may also wish to briefly mention the Federal Reserve's anecdotal Beige Book report, which was released Wednesday, September 11.

As part of your analysis, present a recommendation to the Federal ReserveíŸÙs Open Market Committee on whether to raise, lower, or keep interest rates unchanged at their meeting on September 24. If you wish, you may write up the assignment in the form of a memo to Alan Greenspan.

Keep your analysis concise (2 pages of text, maximum). Feel free to use a chart or two if you think that makes for a better presentation.

Useful Web Links for the actual Data Reports (which are also listed on my Web site):

http://www.federalreserve.gov/releases (Industrial Production, Beige Book)

http://www.census.gov (Census provides data on retail sales, housing starts/permits and business inventories)

http://www.bls.gov (Consumer Price Index)

http://www.sca.isr.umich.edu/ (Consumer Sentiment Index. Note: data on site are through August, but see press and media reports for the mid-month update released last Friday.)

You will also want to consult the assessments by journalists and analysts available in news reports (Wall Street Journal or New York Times). In addition, the JP Morgan Weekly reports that are posted on my site (www2.bc.edu/~murphyro/EC304.html) may be helpful.

Please turn in this assignment in class next Tuesday, September 24. Be prepared to participate in a class discussion of what you would recommend to Alan Greenspan and the FOMC, which also will be meeting in Washington while we have class that morning.