Certainly, current policy is ultra-accommodative and no policy-maker believes that it is consistent with price stability. |
Even though the pace of starts may continue to edge lower on an underlying basis, we look for about a 6% gain in January. |
From our standpoint, the change in language represents a small step toward an eventual rate hike. |
I don't think the market is pricing in a big risk of a surprise. |
If the Fed has a bit of an itchy trigger finger, the ECI headline number gives them the excuse to go sooner rather than later. It does increase the odds of a tightening on Aug. 24. |
Overall retail sales growth in December should be robust. |
Since we believe that the underlying state of the labor market is quite healthy, we would expect any negative weather- related impact on the February data to be recouped in March. |
The economy has shown tremendous resilience in the face of energy prices so far. But this latest spike will have a noticeable effect in the next couple of months. |
The negative impact associated with the energy shock will be more evident in the fourth quarter even though it hit in September. |
The producer price numbers on Wednesday and the productivity number on Friday are the most important events we have ahead of the Fed meeting. There's still some uncertainty in the market about what the Fed will do and those numbers will be key to figuring that out. |
The resilience of the consumer really shines through in this data. |
There is obviously a lot of concern about the state of the housing market right now. One thing that caught a lot of people's attention was this nine-year high in unsold homes. |
This is great news on the inflation front. It will be very difficult for the economy to generate any sustained rise in core inflation with unit labor costs showing such a high degree of restraint. |
Virtually everything else in the report was quite strong. |
We continue to look for the core CPI to drift up by a few tenths of a percentage point over the next year -- from +2.2% to +2.6%. |