More from the minutes: the contrast between the real economy
More from the minutes: the contrast between the real economy and the financial markets was palpable in the minutes. "Participants noted the contrast between the strength of incoming data on economic activity and the concerns about downside risks evident in financial markets and in reports from business contacts. Recent readings on household and business spending, inflation, and labor market conditions were largely in line with participants' expectations and indicated continued strength of the economy. By contrast, financial markets were volatile and conditions had tightened over the intermeeting period, with sizable declines in equity prices and notably wider corporate credit spreads coinciding with a continued flattening of the Treasury yield curve; in part, these changes in financial conditions appeared to reflect greater concerns about the global economic outlook. Participants also reported hearing more frequent concerns about the global economic outlook from business contacts." Importantly, while participants revised down their view of the policy path, dropping the dots to 2 from 3, there was little change to officials' assessments of economic conditions. They generally saw continued strength in consumer spending, with still solid business fixed investment, despite the slowing in Q3. Analysts suspect more data like Friday's jobs report, and still historically high levels of manufacturing and services PMIs may alter FOMC views by the March meeting.