Robert Brusca
Robert Brusca
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Worker productivity generally creates a scenario where employees realize they can begin to demand more for what they do. While the year-over-year productivity gains are still quite good, there is some evidence that wage inflation may be starting to creep in. The Fed won't like this.
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They are desperately concerned about maintaining inflation fighting credibility. So the Fed is not focused on inflation, it's focused on inflation in the future.
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The sell-off in bonds is for real and is the correct reaction. The Fed will need confirmation to act. The bond market won't. It takes no prisoners.
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The Fed has never said this borrowing is a mistake and that this is a problem.
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Credibility is a key here. The Fed can't go out hammering away at some of these issues and then say, 'Oh, never mind,' when one of the key dates comes. So I think that's something else that sort of forces the Fed to put its cards on the table.
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The Federal Reserve has talked about the economy being in a soft spot -- well, it's really in a soft spot.
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It's not good. It's a huge step back for the Fed. It's not the direction where the Fed wants to go. It's unsettling.
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The Federal Reserve, with the ink barely dry on its statement of intent to move in a measured pace, has begun a new theme that says 'measured' may be too slow.
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Inflation is rising in more sectors than it is falling. It is doing so across horizons of one month, six months and 12 months. We are left in all this wondering what the Fed is up to and what it is waiting for.
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Inflation decelerated across a broad spectrum of core CPI areas -- about 40 percent of prices in the core showed declines in their year-over-year growth rate. That's a big proportion. The Fed is concerned and has a reason to be concerned.
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I think we're going to have a slower recovery, ... There are other things that suggest there are limits to what the Fed can do.
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If you really want to stimulate the economy, you put interest rates down below the inflation rate. The lower the inflation rate goes, the harder it is to get the federal funds rate down below that.
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It means we sort of dodged another bullet on the inflation front. These kinds of numbers put the Federal Reserve in a difficult box. We don't have inflation, the economy is growing too fast, they are afraid it won't keep up, but it's hard for them to raise rates without any inflation on the doorstep.
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The rise, however, does not mean that housing is out of the woods -- far from it. The Fed is still hiking.