Even with a resolution to the situation in Iraq, the economy will still be suffering from some fairly significant headwinds, |
Even with a resolution to the situation in Iraq, the economy will still be suffering from some fairly significant headwinds. |
Even with this dip, the unemployment rate is still about a percentage point above the level where it might threaten inflation. That means there's plenty of wiggle room for the Fed on policy. They're going to be patient and not change the wording of their statement next week. |
Eventually that will slow down the U.S. consumer. We've got the seeds of a slowdown coming out of the housing market, but it hasn't really had that much impact yet on the economy. |
Everyone is all zeroed in on the consumer now, but the truth is that the consumer isn't the driver now. Confidence is picking up, but still at average levels. Wage growth is slow and the bulk of the tax cut is already in place. Finally, with all the debt people have taken out over the past several years the burden of paying monthly bills is leaving less for discretionary spending. |
Fed officials ... likely anticipated some fallout in fixed income markets, ... We believe ... that Fed officials wanted to signal a greater probability of tightening in 2004 than had been priced into markets. |
Firms have cut back on their capital spending budgets to the point where some of them are not even replacing worn-out equipment. It's been quite a dramatic pullback, and in some sense there's some pent-up demand out there for capital equipment. |
For the Fed to hike rates now would be the equivalent of a doctor prematurely declaring a patient at full health, discharging them from the hospital and then forcing them to run a mile. |
From the market perspective, there's a big difference [between 6 percent and 5.8 percent unemployment], especially since there's a lot of talk out there that maybe a recovery is at hand. |
Housing prices tend to turn very slowly, and that delays whatever impact they might have on the economy. |
I don't think this should alter anybody's views about the Fed in a major way. |
I think that (high inflation readings) would be almost the last straw to convince the Fed. |
I think the economy is already in the process of slowing to a more moderate pace. Oil has both an immediate impact on spending and lagging impacts. Even though oil has stabilized in recent weeks, we still have to play out effects. We're still waiting for the shock value of the winter heating bills hitting people. |
I think we know corporate profit growth can't stay at the rate we've seen in recent quarters. They (employers) have been squeezing the work force pretty aggressively, squeezing productivity out of workers and holding the line on wages. It's a matter of how much corporate profits slow down. |
I think what people will see is that commentary from Fed officials will sound almost identical to their commentary prior to this meeting. Nothing's really changed at the Fed. |