Ethan Harris
Ethan Harris
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The main thing holding back the economy in the past year and a half has been a lack of business confidence, and now we're seeing these surveys with a fairly optimistic take on the economy. The non-manufacturing survey certainly reflects the general increase in confidence, and that's a self-fulfilling thing.
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I think that (high inflation readings) would be almost the last straw to convince the Fed.
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I think the economy is already in the process of slowing to a more moderate pace. Oil has both an immediate impact on spending and lagging impacts. Even though oil has stabilized in recent weeks, we still have to play out effects. We're still waiting for the shock value of the winter heating bills hitting people.
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It is gradual step towards a little more flexibility. Inflation, the economy and the markets will dictate how much further they go. They say the economy is strong and that inflation risks are tilted a little to the upside. There is nothing yet in the data that will stop the Fed.
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If you're doing budget planning in business, you budget for the downside risks, not for the most optimistic scenario. But the federal government doesn't have to worry too much -- it's the only business that has a blank check.
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The number itself wasn't very surprising, ... (Federal Reserve Chairman Alan) Greenspan's comments last week that the trade gap might start getting smaller raised attention and some hopes. But I didn't agree with him about that.
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It's the toughest weight class in the state, by far. Everyone here is so tough. There are just some studs in this weight class, so it's going to be the best man who comes through with the title.
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The Fed is saying that 'we're being tested here, we're being tested on our anti-inflation credibility,' ... They need to sound tough. They need a pretty good bark to go with their bite.
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The Fed is going to take a cautious approach (because) they're worried about how the consumer will handle higher interest rates, ... We've had recovery nurtured on super-low interest rates. They don't want to shock the patient by withdrawing the medicine too quickly.
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The Fed is going to have a bias to be very easy in terms of policy, not just in the next couple of months, but well into the future.
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The Fed has made it clear that it will take quite ugly news to get them to move in advance of any clarity around the Iraq situation. That means the March 18 meeting seems too early to expect a cut.
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The Fed's kind of locked into this cautious optimism mode. Everybody there has the same line about how once geopolitical risks abate things will get better.
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The Fed's announced an endgame for monetary policy.
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The consumer is already somewhat vulnerable in the year ahead as the tax-cut effects fade. If we continue to see pressure from energy prices, consumer spending is almost sure to slow down some.