In the minutes from the Federal Reserve's May 9 meeting, one thing is clear: That housing market is bit of a downer.

Specifically, the minutes, released today, say: "The ongoing adjustment in the housing market would probably persist for longer than previously anticipated."

It will probably "continue to weigh heavily on economic activity through most of this year" and it "could have a more pronounced impact on consumer spending than currently expected."

But before you lock your checkbook and throw away the key, remember that this is generally a glass-half-full group of economists. They noted that the subprime fallout seems not to have spread to the rest of the mortgage industry, and sales of existing homes are holding up well.

Despite a few hiccups here and there, Fed officials indicated they are still quite comfortable with the state of the U.S. economy. No surprise there, since they voted to hold interest rates steady at the conclusion of the meeting.

Inflation remains the hiccup most bothersome. Core inflation remains "uncomfortably high," and the officials aren't convinced that recent data on the consumer price index is actually on a downward trend.

"Most participants continued to expect core inflation to slow gradually, although considerable uncertainty surrounded that judgment and the Committee's predominant concern remained the risk that inflation would fail to moderate as expected."

Fed watchers will translate this verbiage into "We're not about to lower rates."

And what does the Fed forecast for the economy? Well, that takes some translation, too.

"Meeting participants anticipated that real G.D.P. would advance at a pace a little below the economy's trend rate of growth through the remainder of this year and then pick up to a rate broadly in line with the economy's trend rate in 2008."

Translation: "We're moderately upbeat. Just like we were at the last meeting."

by Megan Barnett