Warning for the Fed

The Federal Reserve set out to slow domestic demand, and slow it the central bank did. Final domestic demand, officially known as final sales to domestic purchasers in the recent gross domestic product report, rose at less than one-third the pace in the fourth quarter of 2000 as it did in the first. The 2.1% rise last quarter represents the slowest pace for final domestic demand since the first quarter of 1993, when broad money supply growth had come to a halt following the resolution of the savings and loan crisis. For what it is worth, broad money supply growth is accelerating. The sp...