The transcripts paint a better picture of how the Fed was processing souring economic data.
According to NBER, December 2007 marked a peak in economic activity, and after that, we went into recession.
That makes the transcripts from the January 2008 meeting particularly interesting. Here's Dallas Fed President Richard Fisher getting things a bit wrong, complete with a Woody Allen reference. From the transcript:
I am delighted to hear all this anecdotal evidence. We were talking, Governor Mishkin and I, about Woody Allen earlier. If I remember correctly, he had a wonderful quip-that he cheated on his metaphysics exam by looking into another boy's soul. [Laughter] Basically, what we are doing at this time of transition is almost cheating on the data by looking at the anecdotal evidence. My broader CEO soundings indicate pretty much the same as what we are seeing in our District and what others have mentioned-shipping, rail, express delivery, manufacturing, and other activities are much slower. Retail sales are soft. As President Poole and others pointed out, truckers are suffering. Receivables are being stretched out. Delinquencies are rising. I could bore you with specifics company by company, as I am tempted to do, but I will not unless you wish me to. The point is that, while there are tales of woe, none of the 30 CEOs to whom I talked, outside of housing, see the economy trending into negative territory. They see slower growth. Some of them see much slower growth. None of them at this juncture-the cover of Newsweek notwithstanding, a great contra-indicator, which by the way shows "the road to recession" on the issue that is about to come out-see us going into recession. I will just give you two indicators there. If you look at MasterCard and dig into their data, their December retail sales ex-auto, ex-gas, were up 5 percent and in January to date were up 4 percent. President Poole mentioned UPS, and President Lockhart has the incoming CEO of UPS on his board. Year over year to January, they are up 2 percent. So it is anemic. It is not negative. The expectation is not to be negative. My CEO soundings indicate pretty much what we have forecast as a group-much slower growth, not necessarily a recession.
Some of Fisher's colleagues - including current Fed Chair Janet Yellen - were already using the "R" word by January. But many at the Fed didn't see what was coming.
We'll pulling out more nuggets from the report.