Ethan Harris
Ethan Harris
chance cut fed four gone hold might months period rates reasonable sitting
We've gone from a period where there was a reasonable chance the Fed might cut rates just four months ago to one in which the Fed is very much comfortably just sitting on hold for now.
data economy few lost momentum months outcome positive time weak weeks
Even with a positive outcome in the war, the economy is going to have lost a lot of momentum by the time it's over. We're not going to see a few weeks of weak data -- we'll see a few months of weak data.
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We knew we would have a very weak number because of a collapse in auto sales after two big months in a row and the incentives kind of stop working ... But if you look at the rest of the report, every single major component was up. It was very broad-based growth across many components.
believe chronic economists employment finally hope improvement month overall past reason relative stage tendency three
At every stage in the past three years, employment has disappointed relative to overall activity. It's a chronic issue, and there's been a tendency for economists to hope this will finally be the month when improvement occurs. But I have no reason to believe it will.
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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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What's happened between now and then is that we've accomplished everything we've set out to achieve, ... Then they were trying to get the economy to the state it is in now, so the attitude now is, 'lets not screw anything up.'
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With few signs that consumer prices are about to break to the upside ... along with signs that aggregate demand remains robust, we expect the Fed will not only vote to keep rates constant, but will leave the growth and inflation bias statements unchanged.
benign inflation remain
We think inflation is going to remain benign going forward.
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We see a number of reasons for the Fed to drop its 'measured pace' language.
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These continued claims are a sign the unemployment rate is still on an upward trajectory. There are still a lot of people out of work out there.
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Fed officials ... likely anticipated some fallout in fixed income markets, ... We believe ... that Fed officials wanted to signal a greater probability of tightening in 2004 than had been priced into markets.
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Real estate is a topic that has vaulted to center stage, ... The real reason the topic is hot and belongs on the front page of research reports is that the housing market is becoming more of an engine of economic growth, but is also the biggest risk to future growth if the boom goes bust.
coming growth next wage
We are going to get some follow-through, some hiring, but it will be slow. I don't see wage growth coming back in the next year.
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Even in a healthy economy, you have layoffs. The Challenger number is more useful as a story telling device than an indicator.