Oscar Gonzalez
Oscar Gonzalez
achilles demand economic economy fed growing heel increasing interest labor lowering market people primary rates remains robust strongly talking work zero
The labor market remains the Achilles heel of a robust economic recovery, ... With the Fed talking about lowering interest rates to zero to get the economy growing strongly again, getting people back to work and increasing demand may be the Fed's primary worry.
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Inflation has picked up and there is some pricing power evident. Certainly by saying that, the Fed is telegraphing that they could easily increase rates by 50 basis points if they had to, even though at this point there doesn't seem to be a need for more than a quarter-point hike,
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Higher oil prices and the stimulus coming from additional spending after Katrina both suggest that Fed would be on the side of raising rates.
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Before the Fed went ahead and raised by a half-point, it would probably choose to eliminate the measured language.
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All eyes will now shift to next week's employment report. The figures we've seen over the past few weeks suggest it will be quite weak. The report may be enough to push the Fed into giving the economy another shot in the arm at their next meeting.
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Continuation of a slowing trend is likely, and it could put the Fed in a pretty tight spot, because it could leave it wanting to possibly reverse its recent policies and start easing rates.
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The latest economic releases are just another sign that the economy is quite sick. I am quite confident the Fed will react aggressively.
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I think the Fed will act aggressively. The timing remains to be seen, but both Main Street and Wall Street are pleading for further rate cuts, so I think Greenspan will respond. The sooner and deeper a rate cut, the sooner consumer and business confidence should improve.
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The report isn't so tame as to deter the Fed from bumping rates another notch, especially with Y2K fears dissipating and consumers showing no signs of fatigue. However, it should ease market fears that the Fed will need to tighten several more times.
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I don't think recent price data suggests that inflation is dead. The Fed has to worry about whether or not it is keeping inflation under control and it would probably like to err on the side of caution.
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The longer we go along this path, the clearer it becomes that the Fed may have to jolt consumers and investors with a more aggressive policy,
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Even though the numbers are soothing, the Fed still is on high alert for a future flare-up in prices,
achilles demand economic economy fed growing heel increasing interest labor lowering market people primary rates remains robust strongly talking work zero
The labor market remains the Achilles heel of a robust economic recovery. With the Fed talking about lowering interest rates to zero to get the economy growing strongly again, getting people back to work and increasing demand may be the Fed's primary worry.
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Inflation hawks may be eating crow today. Despite their fears of tight labor markets and a strong economy, inflation is only creeping, not accelerating. I don't think that this report assures that the Fed tightening cycle is over, but I wouldn't be surprised to see rising market expectations of a rate cut. With most prices in check and energy prices easing, this report is about as good as it gets.