ZIFFPAGE TITLEMorning Forecast

By Mel Duvall  |  Posted 2005-04-06 Print this article Print

How does Federal Reserve chairman Alan Greenspan decide to raise rates a quarter point? By analyzing a potent mixture of raw pecuniary data and computerized economic intelligence against first-hand reports from key hubs of U.S. financial activity and five

Morning Forecast

Most official government data comes out at 8:30 a.m. or 10 a.m. on a given day. GDP numbers, for example, are issued at the end of each month from the Commerce Department's Bureau of Economic Analysis at 8:30 a.m. Eastern time.

By 8:35 a.m., Cannon's office has downloaded the figures from the bureau's Web site. By 8:45 a.m.—9 a.m. at the latest—they are uploaded into FAME. Cannon's office then sends an e-mail to let staff know new figures are available.

Fed economists anticipate mornings when marquee numbers come out—such as the GDP or the Consumer Price Index—like baseball fans waiting for the latest box scores.

"They're ready and waiting and wanting to know if there's the least little problem [with their economic forecasts], and they're more than happy to volunteer their assistance to type in numbers if they have to," Cannon laughs.

These days the Fed receives most data electronically, through downloads from Web sites or e-mail. That's a major change from when Cannon joined the Fed seven years ago. Back then, people, not machines, gathered data, she says.

"We used to send a staff member and a driver to the various agencies to pick up a package that would have some form of media on it—a disk or tape—and then wait for them to drive all the way across town before we could start inputting and processing things," she recalls. Some reports, such as the Advance Monthly Sales for Retail and Food Services, came on paper and would be typed into the database.

This download-upload process of populating FAME is repeated 50 to 60 times per month, whenever new data comes out. When Cannon's seven staffers aren't shunting information around, they produce tables and charts with the latest figures to distribute across the agency, to the Fed's economists, reserve districts, governors and, of course, to Greenspan.