Today, the Federal Open Market Committee released a report on the state of the economy. Here is an excerpt:

The information reviewed at the October meeting indicated that economic conditions deteriorated in recent months. The labor market weakened further in September as private payrolls fell at a faster pace than earlier in the year and the unemployment rate remained above 6 percent. Industrial production fell in September, although much of the drop was related to effects of recent hurricanes and a strike at an aircraft manufacturer. Consumer spending declined, reflecting stagnant real income, tighter credit, declining wealth, and concerns about economic conditions. The housing market remained weak, with construction activity, new home sales, and home prices falling further. Business spending on equipment and software appeared to have declined again in the third quarter, and indicators of investment in structures weakened. Economic activity in many foreign economies slowed in recent months. Headline consumer inflation measures, pulled down by declines in consumer energy prices, moderated in August and September. Core consumer inflation measures also eased somewhat in these two months.

The labor market continued to weaken. According to the September labor market report, the unemployment rate remained at 6.1 percent, but private payroll employment fell faster than the average pace earlier in the year. Most major industry groups shed jobs. The manufacturing, construction, and temporary help industries continued to experience sizable losses in employment; meanwhile, retail trade and financial services registered larger declines than earlier in the year. Nonbusiness services added jobs, but at the slowest rate of the year. The average workweek and aggregate hours declined in September, and weekly unemployment insurance claims continued to rise in October.

Industrial production dropped sharply in September. Although much of the decline was due to the effects of the recent hurricanes and a strike at an aircraft manufacturer, most major industries experienced slow or declining output in recent months. Motor vehicle assemblies were unchanged in the third quarter at a low level. The pace of high-tech equipment production slowed in the third quarter relative to its rate in the first half of the year, reportedly in part because tight credit conditions were restraining demand. Available information suggested that demand and production in this sector were likely to remain relatively subdued over the coming months. The output of other manufacturing sectors declined in the third quarter. While standard indicators of near-term production suggested factory output would decline further over the next few months, the recovery of production in industries affected by the hurricanes was expected to offset these declines to a degree. The factory utilization rate fell in September to well below its long-run average.

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