The times they are a'changin' - albeit slowly. According to the Federal Reserve's most recent Beige Book, 11 of the 12 Districts indicate that economic activity continued to stabilize in July and August with most markets designated "stable." Nevertheless, the Fed intends to keep the key lending rate near zero for "an extended period." Economists predict that the historically low rate will be maintained at least through the first quarter of 2010. The equity markets continue to respond positively to the news. The Dow, NASDAQ and the S&P 500 all closed out the third quarter on a high, posting gains of roughly 15%. While October is traditionally a weak month, all three indicators are seemingly maintaining; the Dow is in the neighborhood of 9,800 at this writing. The "third" and most recent Q2 Gross Domestic Product (GDP) estimate was better than anticipated, showing a 0.7% decline compared to previous estimates of 1.0%. The Q2 rate is in sharp contrast to Q1 when GDP dropped a precipitous 6.4%. The Consumer Price Index (CPI) rose 0.4% in August but has decreased 1.5% over the last 12 months while personal income increased a modest 0.2% and disposable personal income increased 0.1% in August. Now for the elephant in the room:
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