Not surprisingly, the worst economic news came from the manufacturing sector with declines in September industrial production and the October Philadelphia Fed Survey. These were largely related to the September attacks but also reflected a continuation of the anemic activity we were already experiencing in this sector. Positives include inflation, which is subdued, and the housing market which is showing amazing resiliency.

Greenspan's cautiously upbeat comments didn't suggest one way or another how the Fed will act at the next FOMC meeting in November. The tame inflation figures will allow the Fed room to cut rates further if they so choose. One way to gauge the degree of accommodation in monetary policy is to look at the real federal funds rate, that is, the nominal rate less the year-over-year change in the consumer price index (2.5 - 2.6 = -0.1 percent). With virtually a flat real rate, one could make the case that the Fed is aggressively accommodative. They could go slightly negative on the real rate, so that another 25 or 50 basis point drop is not out of the question.