Bill Cheney
Bill Cheney
fact future looks people prices
The fact that prices have come down makes people feel better and they think the future looks better.
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With today's report, the odds of a negative quarter of GDP growth have increased substantially, and the chances of a full-fledged recession just went up -- perhaps approaching 50-50. 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.
domestic growth increased negative odds quarter
With today's report, the odds of a negative quarter of GDP (gross domestic product) growth have increased substantially.
coming fairly fed percent starts sticks
If unemployment sticks at about 6.0 percent and starts coming down, the Fed will probably feel it has to start tightening fairly soon.
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I think we're toward the end of a period of real weakness and, by the third quarter, all the money (Fed Chairman Alan) Greenspan and the Fed have been pumping out will start to be spent.
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By mid to late October, you're getting into the fourth quarter, and people are starting to look at their year-end results and deciding whether they can bail out now and still look good for the year. That's going to be as true now as it was (in 1987).
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The moment they think there are jobs there, they'll be out looking and the employment rate will start heading up again. I think that's on the whole a good sign at this point in the cycle.
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It would be kind of like when they put through a substantial emergency rate cut when the market crashed in 1987. I don't think it is evidence of panic to treat what happened yesterday as an emergency. It's an emergency on many levels.
indicator time
Every time you see another indicator that they (consumers) are still spending, that's encouraging.
absorb increase jobs labor month natural numbers order positive rate rather smaller takes
It takes something on the order of 150,000 new jobs a month to absorb the natural increase in the labor force. As long as we keep getting smaller positive numbers than that, the unemployment rate should be trending up rather than down.
bark concern deficits economic far near record shows simply spark threat trade worse
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.
actions bona confidence cut demand directly downward edge impact indirectly job lay losses newly recession spending spiral tend
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.
bets committed fed guessing january point raising rates
At this point I am guessing that the Fed is pretty committed to raising rates in January but after that all bets are off.
employment next piece report
Next week's employment report will be a much more important piece of new information.