Spending ended the quarter on a strong note, and that largely reflects the return of growth in auto sales. It's confirmation that spending was getting back on track. |
That's consistent with the idea that labor market conditions are not really improving yet. They're not getting worse, either, but they've only stabilized. |
The economy looks strong, as does the industrial base. |
The economy will grow faster in the first quarter. Consumer spending is recovering. |
The huge U.S. trade deficit may finally be stabilizing. |
The main point is that when they sit down, they will conclude that what we want to do is to continue to remove the accommodative policy, |
The main point is that when they sit down, they will conclude that what we want to do is to continue to remove the accommodative policy. |
The numbers are a little better than we expected, |
The numbers are a little better than we expected. Still, these things bounce around, and I think we'll probably see the unemployment figure break 4.5 percent next month. |
The overall weaker GDP number coming from the trade data does give you a more bullish feeling on Treasuries, |
The price of gold is not particularly well explained by monetary policy. |
The thinking that has surprised us has been that the markets and the Fed have been more concerned about the impact on inflation expectations than they've been about real growth. |
There hasn't been a lot of correlation between commodity prices and inflation since 1990. |
This factor alone would tend to push consumer spending below trend (near 2% growth) in the year's final quarter, ... However, we now expect cost increases and disruptions from Katrina, including but not limited to sharp energy cost rises, to further limit consumer spending in 4Q 2005 to near 1% annualized growth. |
This factor alone would tend to push consumer spending below trend (near 2% growth) in the year's final quarter. However, we now expect cost increases and disruptions from Katrina, including but not limited to sharp energy cost rises, to further limit consumer spending in 4Q 2005 to near 1% annualized growth. |