Job growth has kind of stalled out. It's a puzzle. |
Job losses cut directly into the spending of the newly unemployed, and indirectly tend to have a very real impact on the confidence of those who are still working. If demand falls, firms will lay off more employees, and the downward spiral could put us over the edge into a bona fide recession before the Fed's actions can take effect. |
Looking ahead beyond the current gloom, there is a serious risk that we already have inflationary forces baked into the system. By late spring, the Fed could be cranking up interest rates even faster than they cut them. |
Looking forward, we have Katrina and the price of oil to worry about. I think the odds are still against it, but Hurricane Katrina could prove to be the exogenous shock that we've feared could dramatically slow or even derail the expansion. |
Looking forward, we have Katrina and the price of oil to worry about. I think the odds are still against it, but Hurricane Katrina could prove to be the exogenous shock that we've feared could dramatically slow or even derail the expansion. |
Many businesses see statistics showing economic growth as a cruel joke. Competition is still brutal, wages are still rising, prices are still flat or falling, and profits are as hard to find as they were a year ago. |
Monetary policy is the perfect instrument for these circumstances. The Fed can keep pushing as needed, but still can turn on a dime and pull back as soon as spending starts to rebound. |
Most of the really alarming data has related to the manufacturing sector, which clearly is slumping. But since it only accounts for about 15 percent of total employment, it isn't dragging everything else down. |
Next week's employment report will be a much more important piece of new information. |
Now we're starting to see that wash out, and we're seeing that the labor market really has been gradually strengthening for most of the first half of this year. And this is fundamentally good news for consumers and for the health of the recovery going forward. |
Oil producers are squabbling over production cuts, and a price war seems possible. If they can't get their act together, prices could fall further and stay down for another three to six months. That's more money in consumers' pockets and even more stimulus for the economy. |
People are now looking for jobs because it is now worth looking. |
Perhaps Santa's sleigh was a bit lighter than we thought. |
Record or near-record trade deficits spark howls of concern about the threat posed to the economic expansion, but like inflation, the trade deficit's bark has been far worse than its bite. April's deficit, another near record, simply shows that we are still importing like there is no tomorrow. |
Regardless of what happens to energy prices and interest rates, homebuilding is going to happen and that's going to affect the national statistics but not by a huge amount ... it sort of disappears in the context of the national economy. |