Statement for the Treasury Borrowing Advisory Committee

Statement for the Treasury Borrowing Advisory Committee
of the Securities Industry and Financial Markets Association

April 28, 2008
Washington, DC--Economic growth slowed considerably in the first part of 2008, with consumer and business spending affected by the housing downturn, credit market disruption, and the impact of high energy prices. These headwinds are expected to be offset in part by the stimulus payments and investment incentives enacted in February as part of the Economic Stimulus Act of 2008. Even so, the U.S. economy is likely to grow at a rate below trend and the labor market to remain soft throughout the year.

Real GDP grew at an annual rate of just 0.6 percent in the fourth quarter of 2007, and data released so far indicate that growth remained quite sluggish in the first quarter of 2008. The advance estimate of first quarter GDP will be released on April 30.

Household spending has been affected by a weaker job market, declining wealth from housing and equity markets, and rising energy costs. Real personal consumption expenditures were flat in February after having risen only slightly in January. Together with lackluster retail sales in March, it appears likely that consumer spending slowed considerably in the first quarter from the 2.3 percent annual rate posted in the fourth quarter.