Anthony Chan
Anthony Chan
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The headline number is encouraging, but if you strip out the volatile components and look at core growth, it's telling you we're turning the corner, but we're not running around the corner.
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What the Fed showed was that extraordinary circumstances require an extraordinary strategy. Not only are they moving rates to lows not seen since the early '60s, they're prepared to move them a lot lower.
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We will see more bad news on the employment front. We see unemployment going to 6.1 percent or 6.2 percent before it's over; no way are we going to see that coming down while we're creating so few jobs.
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These claims numbers confirm the notion that things may improve sometime in the future. The fact that we didn't go over 400,000 was very encouraging.
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These results suggest that the current low energy prices should serve as an important and positive boost to overall economic growth.
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The stock market didn't want the economy to grow too quickly because they were worried about aggressive rate hikes, ... They wanted the Goldilocks approach where everything was just right. But now they realize that maybe the porridge is a bit too cold for their taste.
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The small improvement in labor market conditions, despite the continued risks that remain on this front, do suggest that even with all the caveats that Greenspan echoed in his latest testimony ... the Fed might be inclined to move towards a neutral risk bias.
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The significant number of headwinds such as rising energy prices and the prospects of rising short-term rates are taking their toll on the economy,
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I still don't think they'll lower rates, but this tells me they're prepared to lower them at the first sign of trouble.
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It would have been a lot more comforting to see greater strength in the ex-auto component than in the headline figure.
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The risk of deflation has increased. Is it a significant risk? Probably not.
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The rise in the unemployment rate takes much of the sting away from the robust gain in payrolls from a monetary policy perspective. The big fear ahead of the release of this report was that labor markets were overheating.
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Essentially, the energy prices outlook offers almost a lose, lose scenario. Bad news for inflation if they rise and bad news for the economy if they rise too much.
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There's a danger in being too positive, of there being a huge disconnect between how positive a policy-maker sounds and what the economy is doing. That was probably one of O'Neill's greatest shortfalls -- the dichotomy became too wide.