Anthony Chan
Anthony Chan
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These numbers tell us that the underlying productivity surge observed in recent years remains alive and well. If productivity could rise by 1.1 percent during a sluggish growth environment, imagine what can happen once the U.S. reverts back towards trend economic growth.
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These numbers give us an indication of the trend, and the trend is still telling us we're in improvement mode, not in breakout mode, where job growth is surging,
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These numbers give the Fed license to cut rates as much as necessary.
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These numbers confirm the notion that consumer spending, which has been so resilient, is under some threat. With investor sentiment so weak and the labor market continuing to deteriorate, consumer confidence had only one way to go -- lower.
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These numbers clearly tell me we have not hit bottom in the economy.
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These numbers are suggesting that a future Federal Reserve tightening will be coming to a theater near you quite soon.
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These numbers are essentially telling us that retail sales were artificially boosted by zero-percent financing. These numbers are not going to do anything to discourage the Fed from thinking that the balance of risk in the economy is toward weakness.
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This is clearly a non-threatening report for investors and policy makers alike. Labor market conditions appear to be tepid enough to justify less rather than more Fed rate hikes while wage pressures did not spoil the party.
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The new-home sales market is the canary in the coal mine. Builders have a better clue as to what the right price is to move a house.
It's not all that encouraging for the Fed.
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If you have productivity growing faster than the economy, how can you expect demand for labor to be all that strong? I'm still hopeful that unemployment won't go much higher than 6.2 percent or 6.3 percent, but where we'll peak is not as important as when we turn around. If we sort of linger at 6.2 percent, that will put some downward pressure on consumer spending.
In some sense, that's good. But it's a double-edged sword.
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In other words, before the end of 2002, the Fed should signal that their upward rate moves were just a warm-up for what we can expect in 2003.
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He's saying so far there is sufficient flexibility that we can tolerate a higher deficit than we could 10 years ago. He didn't say ignore it.