Gary Thayer
Gary Thayer
companies inflation labor likely lower materials offset paying raw unit
Companies may be paying more for raw materials and energy, but that is at least partially being offset by lower unit labor costs. That, I think, is likely to keep inflation contained.
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Productivity numbers on a quarter-to-quarter basis are very volatile. The downwardly revised second-quarter numbers could easily be revised upward in the third quarter.
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If we hadn't heard from Greenspan last week that the Fed is still worried about an uneven recovery, we might be more upset about these numbers. But Greenspan is concerned that these retail sales numbers could falter later on so these numbers probably won't have that great an impact.
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If we'd had a substantial decline in the dollar against the Chinese currency we'd have probably seen a substantial rise in the price of some of the items that we buy from China.
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Policy-makers have been worried that rising energy costs could lead to higher prices for other things including higher wages and compensation, but it looks like companies are keeping their employment costs in check.
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I wouldn't disagree with some of the things he said, but I don't know why he said those particular things at this time.
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Now that we're in a more open economy, and there's a lot more opportunity to get goods from overseas, if manufacturers are operating at full capacity, there's less likelihood that somebody will bid up prices at a domestic producer if they can get it somewhere else.
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(The data are) suggesting the decline we've seen in the dollar over the last couple of years is not having an impact. It suggests the dollar may still need to fall to help narrow the trade deficit. But there's a risk to higher inflation if it does.
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The decline in the prices paid component is good news. It looks as if we're seeing some moderation in pricing pressures, but not a significant drop.
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It shows the world central banks recognize the financial markets could use a little extra liquidity and support, ... Hopefully it will help restore confidence. A lot of people expected we would see some sort of coordinated effort.
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It shows that consumers are feeling poorly about the economy, similar to what we've see in other recessions. Confidence is not as low as it was in the recessions of the early 1990s and early 1980s, but it is dropping in response to the worsening employment situation and the concern about the terrorism threat.
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It speeds up the time that the Fed will probably think about raising rates and that's negative for fixed-income.
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It's a good number for the economy. Labor markets are improving, and that increases the likelihood that the economy will remain strong.
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It's a good decline in prices for a change. It appears the big drop in energy prices during November has brought the overall inflation rate down considerably.