Ethan Harris
Ethan Harris
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The national economy usually weathers these storms with relatively minor damage. Second, the hurricane is a 'supply shock' -- a disruption to productive potential -- not a 'demand shock.' The same factors that threaten growth -- higher commodity prices, shipping bottlenecks, reduced local productive capacity -- also threaten inflation.
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The one thing that companies can do quickly without laying people off is reduce the number of hours per week; as the economy slows, that's the natural place for a company to cut back. It's a little harder to pull back quickly on job hiring.
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Some economists give a lot of weight to these surveys, but my feeling is that a survey's only good until the real data come out. The surveys are exaggerating the strength of the manufacturing sector.
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Companies have been able to maintain incredible productivity growth for a low-growth economy. It does look like firms are finding ways to use technology and make do with fewer workers.
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Companies are paying more compensation and getting less productivity growth.
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A negative reading would be a noticeable headline. Some people will quickly discount it, say it's old news, but it could reawaken concern about the economy.
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Are the economic indicators looking like a recession? Absolutely. But you can still hold out hope that the war is resolved in a month or so and the economy can stage some kind of recovery.
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Apparently the Fed's new policy of 'transparency' has taken the shock value out of monetary policy.
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Rubin was a great Treasury Secretary. Nobody in the Bush administration comes close.
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You've had obviously a rise in gasoline prices, which is the visible price in the economy, ... There's (also) a tendency of the public to look at the unemployment rate that actually rose in March, while Wall Street looks at payrolls (which showed a large jump in the number of people working.)
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You're not talking about a full-blown business-cycle recovery here, which is something like 6 percent GDP growth for a year. To get that, you'll need the whole economy operating in full-growth mode, and clearly the consumer isn't.
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You're going to see continued cost discipline. So when growth comes it won't be spent on things like wage increases, but will flow to the bottom line.
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You probably want to subtract about two-tenths of a percent from first-quarter GDP growth. But that's looking like very old history, with the Fed having eased twice since the first quarter. From the market's perspective, you feel like you're in a different world already. The first quarter looks very distant, indeed.
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This is a sector that should be one of the engines of growth and should keep the economy healthy in the face of the weakening housing market.