Gary Thayer
Gary Thayer
bias fed hold level low maintain policy rates steady toward
The Fed will probably hold rates steady at a low level as long as they can. And I think as long as the unemployment rate is rising, they'll maintain a policy bias toward weakness.
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The Fed will overlook the strength in the economy before Katrina and focus more on getting the economy back on its feet and probably will hold policy steady until we see how the economy is actually dealing with the shock of lost jobs and high gasoline prices resulting from Katrina.
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The Fed may be looking at oil prices as a reason for the economy to falter and not a reason for it to overheat, so they won't want to raise rates yet,
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The (February) manufacturing report was a little better than expected, showing continued growth in manufacturing.
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If unemployment continues to decline and the economy grows at an above-average pace ... I think they (the Fed) will be a little more concerned about bottlenecks.
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If you put the two months together it still looks as if retail sales were strong at the beginning of the year -- an average increase of 0.8 percent for each of the two months.
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If you look at the 12-month change in producer prices, it's positive 0.9 percent. As recently as May, the 12-month change was negative 2.8 percent -- so there were a lot more deflationary pressures earlier in year, and those seem to be abating.
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If you look back at the'70s and'80s, the Fed was perceived to be the man behind the curtains. Today, it's looked at as a more prominent player. I'd say (Greenspan's) better known than members of the Supreme Court, and that wasn't true of his predecessors.
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Clearly today's numbers show that the economy is still healthy and that the Federal Reserve probably will still be concerned about inflation for at least a couple more months.
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Claims are still suggesting that the economy started the year with a strong employment situation.
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But it looks like Mr. Greenspan is saying the slowdown in the economy will be short-lived and that suggests that the Fed will probably continue to raise rates.
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Confidence is up again -- to the highest level in over two years. Consumers are feeling better not only about current conditions, but also about prospects for the future.
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Energy prices are dropping, and consumer spending is holding up despite rising unemployment . These are encouraging things the market is recognizing.
bit looks midwest remained
It just looks like manufacturing in the Midwest cooled off a bit in January, but remained healthy.