The Federal Reserve said slack in the labor market persists even as the economy is picking up, and it continued to trim monthly asset purchases that have pumped up its balance sheet to a record $4.41 trillion.
“A range of labor-market indicators suggests that there remains significant underutilization of labor resources,” the Federal Open Market Committee said today in a statement in Washington. “The likelihood of inflation running persistently below 2 percent has diminished somewhat.”
Policy makers tapered monthly bond buying to $25 billion in their sixth consecutive $10-billion cut, staying on pace to end the purchase program in October.
Fed officials led by Chair Janet Yellen are stepping up a debate over when to raise interest rates for the first time since 2006 as unemployment falls faster than expected and inflation picks up toward their 2 percent goal.
The outlook brightened today with a government report showing the economy expanded more than forecast in the second quarter. At the same time, Yellen has expressed concern about persistent signs of labor-market slack, including low wages. The FOMC repeated it’s likely to reduce bond buying in “further measured steps” and to keep interest rates low for a “considerable time” after ending purchases.
Committee’s Objective
“Inflation has moved somewhat closer to the committee’s longer-run objective,” the Fed said. Its preferred inflation gauge -- the personal consumption expenditure price index -- rose 1.8 percent in May from a year earlier. Its 12-month gain was as low as 0.8 percent in February.
“They are protecting their credibility” by flagging less risk that inflation will persist below their target, said Mark Vitner, senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “Inflation has moved from a reason for the Fed to be easier for longer to more of a neutral factor in policy.”
Stocks gained while bonds remained lower after release of the Fed announcement. The Standard & Poor’s 500 Index increased 0.1 percent to 1,971.75 at 2:38 p.m., while the yield on the 10- year Treasury note rose nine basis points to 2.55 percent.
Philadelphia Fed President Charles Plosser dissented, objecting that the guidance on the timing of a rate increase was “time dependent” and didn’t reflect “considerable economic progress.”
Bond purchases will be divided between $15 billion in Treasuries and $10 billion in mortgage-backed securities.
Achieving Goals
Since meeting in mid-June, the committee has come closer to achieving its goals for stable prices and full employment. Employers added 288,000 jobs last month, helping push down unemployment to 6.1 percent, the lowest in almost six years.
Today’s Commerce Department report showed gross domestic product expanded at a 4 percent annual pace in the second quarter, confirming the Fed’s view that a first-quarter contraction was transitory.
Consumers, whose spending accounts for 70 percent of the economy, have grown more confident as the labor market improves and rising share prices boost wealth.
The S&P 500 index is up more than 6 percent this year after jumping almost 30 percent last year, aided by easy monetary policy and rising corporate profits.
Almost 77 percent of companies in the S&P 500 have posted second-quarter results that exceeded analysts’ estimates, according to data compiled by Bloomberg.
Slow, Steady
The recovery in demand has “been slow and steady,” said Mike DeWalt, corporate controller for Peoria, Illinois-based Caterpillar Inc., the world’s biggest maker of construction and mining equipment.
Yellen told lawmakers this month that while her view of the economy has turned “more positive,” she’s concerned about signs of job-market “slack” such as low participation in the labor force.
“We need to be careful to make sure that the economy is on a solid trajectory before we consider raising interest rates,” she said in her semi-annual testimony. “There are mixed signals.”
Among them: average hourly earnings fell or were stagnant in the past four months, after adjusting for inflation.
“The most important thing is to look at what’s going on with hourly wages,” according to Brian Jacobsen, who helps oversee $232 billion as chief portfolio strategist at Wells Fargo Advantage Funds in Menomonee Falls, Wisconsin.
Flat earnings will probably compel policy makers to err on the side of keeping rates low, said Ellen Zentner, a senior economist at Morgan Stanley in New York.
“This is a Fed that’s going to have to be slapped across the face with higher wage growth before they raise interest rates,” she said in a July 25 Bloomberg Radio interview. “And we just haven’t seen any kind of data that points to that yet.”
--With assistance from Tom Keene in New York.
) reported its second quarter earnings, posting lower revenues and higher earnings from operations than last year’s Q2.
NEW YORK (CNNMoney) Americans are taking their medicine. 
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Andrew Burton/Getty Images One thousand days and counting. That's how long it's been since the Standard & Poor's 500 index (^GPSC) suffered a correction. That means the S&P 500 hasn't suffered a 10 percent drop from its recent high level mark since October of 2011. What does that mean for investors? Should they take their profits now, or does this long-running bull market have more room to maneuver? One thousand days is a long time for the bull market to run without interruption, but it's not unprecedented, and it doesn't necessarily mean another correction is right around the corner. The bull market of the 1990s ran for 2,553 days without a correction. "When the market does something unusual it is a good idea to be on your guard," said Hugh Johnson, chairman of the Albany, New York-based money management firm Hugh Johnson Advisors. "For the market to have performed as well as it has without a significant correction is pretty unusual," said Johnson, "but I'm not doing anything about it." Most analysts say the 1,000 day mark isn't significant in their fundamental analysis of the market, but they acknowledge that it is psychologically important for investors. The current streak is double the average span without a 10 percent pullback. About one year after the current bull market began in 2009, there was 16 percent correction in 2010. The most recent correction came in 2011, when the market slumped by a steep 19.9 percent, and there was a close call in 2012 when it fell 9.9 percent. According the Stock Trader's Almanac, the average bull market includes two periods of correction, so the current rally isn't unusual in that regard. Many market pros and anxious investors have been anticipating another correction for quite some time, but the market has continued to plow ahead, setting record after record. So far this year, the S&P 500 has rung up 25 record highs, the latest one coming on Thursday. It went into the 3-day weekend just shy of the unprecedented 2,000 level. In addition, the Dow Jones industrial average (^DJI) topped the 17,000 mark for the first time. That means if you invested in an S&P index fund back when the current bull run began in March of 2009 -- and not traded in and out of that position -- you would have nearly tripled your investment. But Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, says the current bull "gets no respect." The financial media -- in print and on TV -- is filled with gloom and doom forecasts. A recent Wall Street Journal headline proclaimed "Some See Clouds Forming," while some market prognosticators warn that a market collapse is just around the corner. They contend the market cycle has run its course, that the market is way overvalued when you examine corporate profits and other key measures, and that unrest in the Middle East, Ukraine and other hot spots could explode. But most forecasters say that unless there is a major economic crisis (which seems very unlikely after the recent string of upbeat economic data) or a geo-political catastrophe, then the current bull market is likely to continue into next year. Jeffrey Hirsch, editor of the Stock Trader's Almanac, studies historical trends in the market. He expects stocks to trade sideways or retreat a bit during the usual "summer doldrums" of July and August, and then resume their advance later this year and into next year. "I don't see the market rolling over until 2016," said Hirsch, noting that presidential election years "tend to be horrible." Johnson, the veteran money manager who has helped guide investors through many bull and bear market cycles, says he is "on guard" but not worried at this point. He says the market hasn't been overrun by widespread optimism. "You don't run for cover, but you can build some defenses into your portfolio." If you're worried about a downturn, he says you can sell economically sensitive stocks like housing, and buy safer issues like utilities and household product stocks. Many analysts even say a market correction, which is inevitable at some point, is healthy for the long term bull to continue. It gets stocks from levels that are seen as slightly overvalued back into a more fairly priced range. And as Johnson notes, that would provide for "more upside potential with better buying opportunities."
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Subaru is recalling more than 660,000 vehicles for potential corrosion of the brake lines. NEW YORK (CNNMoney) Attention cold climate drivers, Subaru said Thursday that it is recalling 660,238 vehicles. 
Automakers set recall record in 2014 
ryangraves.org How did one man go in a few years from working a dead-end job inside a large multinational corporation to being worth hundreds of millions of dollars (at least) and a key player at what is one of the hottest start-up companies around? And more importantly, how can you use the same techniques to improve your finances and your life? That man is Ryan Graves, head of global operations for Uber, whose mobile app connects would-be passengers with drivers of vehicles for hire. In 2008, Graves was a database administrator for GE Healthcare (GE), a job that he says was "unglamorous" and didn't provide the potential for rapid advancement that he desired. As Graves bluntly put it, "The corporate career -- 20 years in the same company -- was not really my thing. I can't be the GE guy." Moving Out on His Own So in mid-2009, he decide to make a radical change. A fan of Foursquare, an app that allows people to check in on their mobile devices when they patronize business establishments, Graves decided to go to work for the company.
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