Patrick Fearon
Patrick Fearon
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The positive message is that if you strip out the numbers that the Labor Department says are the result of the hurricane, the underlying figures are still pretty decent. That shows that there was some cushion in the economy before Katrina hit.
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We still think that the growth rate will slow substantially in the fourth quarter, in part because the housing sector is softening which will tend to soften consumer spending as well. That is one factor that will probably help the Federal Reserve eventually conclude its monetary tightening cycle.
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We're getting close to the weekly level of new claims that was typical of the months leading up to the late-summer hurricanes and the spike in energy prices.
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We did have a modest upward revision in the previous week's claims, but we remain under the psychologically important 400,000 level and that's definitely something that we've been looking for.
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There is certainly more going on than just hurricanes and a resulting spike in gasoline prices, ... could weigh on people's attitudes.
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The fact that (core inflation) has been on a downward trend for two months is more evidence that Fed policy-makers might stop raising interest rates sooner rather than later.
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The fact that the final number is higher than the preliminary number shows that the American consumer is not going to be easily intimidated.