Nonetheless, indicators of business sentiment from a variety of national and regional surveys have remained generally favorable. Moreover, conditions in the labor market, although a bit softer recently, are still relatively solid, and foreign demand for U.S. goods and services remains strong.
Looking further ahead, the current stance of monetary policy should help the economy get through the rough patch during the next year, with growth then likely to return to its longerrun sustainable rate. As conditions in mortgage markets gradually normalize, home sales should pick up, and homebuilders are likely to make progress in reducing their inventory overhang.