Michael Gregory
Michael Gregory
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We're seeing signs that consumers are starting to feel the impact of persistently high gas prices. As prices stay high we're going to see the impact broaden from discount to more mainstream retailers.
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Despite the fact that energy prices are creeping up and housing continues to crumble, surveys suggest job gains are providing an offset for confidence. The potential is there for consumer spending to remain resilient.
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All is not quiet on the inflation front. Commodity prices and capacity constraints still pose some inflation risks.
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The Canadian currency is considered a commodity currency. When commodities prices are up, investors tend to have exposure to the currency.
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Mortgage equity withdrawal (which keys off prices and rates) is going to ebb substantially and pull consumer spending growth down along with it. When it does, the Fed will pause.
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I think a lot of people's perceptions are still affected by the bubble years. If you take away that four-year period when the unemployment rate was lower, you have to go back some 32 years to find an unemployment rate lower than it is right now.
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People are infatuated with candles, they're using them more than ever,
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Over the past several weeks we've moved from pricing in one further move by the Fed to odds favoring two moves.
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Our last two fires had smoke detectors, but no batteries, ... We're praying to get the word out (about smoke alarms).
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With business outlays solid and foreign demand picking up, this will likely keep the Fed in the tightening game through the first half of the year.
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The question for the Fed is what inflation will look like in 12 to 18 months. The U.S. economy is still growing fast enough to use up slack that's out there in the economy, and that could present an inflation threat down the road.
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There is no question that the economy is slowing, but it's not exactly shrinking, either, ... We are seeing the first tentative signs of slowing, but you have to remember that we are starting at a very high base of growth. The Fed will still err on the side of caution and restraint.
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If it's the case that certain kinds of trade are not done with Cuba right now because they're in U.S. dollars, then that's fine -- changing to the euro might help that. If it's a case where using euros to conduct more liberal trade with Europe, then that's certainly of benefit, as well.
demand domestic economy economy-and-economics exceed fourth growth looking remains spending stock underlying
Underlying demand in the U.S. economy remains solid, irrespective of the stock market. We are looking at growth in domestic spending that will probably exceed what we had in the fourth quarter.