We continue to believe that the underlying drivers of productivity growth are turning less favorable, |
We do believe that the U.S. housing market is a bubble in the sense that its contribution to consumer spending is unsustainable. Households have used a large share of the recent home equity gains to supplement their spending. When these gains dry up, as they ultimately must, spending is likely to weaken substantially. |
We will likely see some 'payback' for the blockbuster April report, which probably exaggerates the underlying job trend. (The latest) ISM index confirms that manufacturing employment has firmly entered contraction territory. |
What matters for our well-being is the net output -- remember, depreciation charges are not available for consumption -- per person in the overall economy, not the gross output per hour worked in the non-farm business sector alone, |
What they're going to be aiming for is to leave open the question of whether they hike on March 28. |
What will be nice, though it's unimaginable right now, is to start forecasting when they might be able to cut rates. |
While the official productivity data look impressive, alternative measures that are equally reasonable show a much more subdued picture. |
You've got seven quarters in which the homeownership rate basically has done nothing. It's fair to say that it's stagnating. |