Again, toward an informed citizenry, here is a summary of current economic outlook and monetary policy from Janet Yellen of the Federal Reserve Bank of San Francisco.

Excerpts:

“A particularly noteworthy development is the recent jump in intermediate and long-term interest rates.”

“Insofar as the rise in longer-term rates seems to be a response to favorable economic conditions—developments that have been part of my own forecast for some time—it has not had a big effect on my overall assessment of the economic outlook.”

“…this rise in longer-term rates does not quell my concerns about a reversal in risk perceptions, a possibility which itself could pose a downside threat to the global economy.”

“Growth in the first quarter of 2007 was notably weaker, but a good part of that was due to the temporary effects of business inventories and net exports. Based on partial monthly data, it seems likely that there was a bounce-back in the second quarter, with growth averaging a modest rate for the first half of the year as a whole. My expectation is for moderate growth during the remainder of this year and in 2008.”

“Personal consumption expenditures have been the main engine of growth in recent years…”

“Going forward, at least some of the growth in consumption can be expected to diminish for a couple of reasons. First, increases in housing wealth have slowed dramatically. Second, energy prices have moved back up this year.”

“…over the past four quarters, the level of residential investment spending declined more than 16 percent in real terms. And during that period, this sector—which represents only a little more than 5 percent of U.S. GDP—has taken a large toll on overall activity, subtracting a full percentage point from real GDP growth.”

“The bottom line for housing from a national perspective is that it has had a significant depressing effect on real GDP growth over the past year. While I wouldn’t want to bet on a sizable upswing, I also wouldn’t be surprised to see it begin to stabilize late this year or next.”