Ian Shepherdson
Ian Shepherdson
Ian Shepherdson is an award-winning British economist. He is the founder and Chief Economist of Pantheon Macroeconomics, an economic research firm located in Newcastle, England, with an office in White Plains, New York. In February 2015, he was named The Wall Street Journal's US economic forecaster of the year for the second time, having previously won the award in 2003...
abruptly begun behind decline higher interest key lies months point presumably prices rates recent rise stagnant steady stock
This is a significant decline in confidence, ... Presumably the combination of higher interest rates and stagnant stock prices lies behind the moves, but the key point is that the steady rise in recent months has abruptly begun to reverse.
key question quickly
The key question now is how quickly it recovers,
deficit easily key point
The key point is that the deficit is being easily financed.
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The key number in this report, in our view, is the rise in the supply of homes for sale. There are now 14.4 percent more homes for sale than a year ago, while actual sales are up just 3.3 percent. With mortgage demand slipping a bit and supply rising, price gains cannot continue at their current pace.
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In any event, a single durable good report will have little effect on the Fed.
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Still, this is a hugely encouraging report, pointing clearly to a vigorous recovery.
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Once rebuilding gets underway in earnest in the Gulf Coast, we expect much stronger construction numbers across the board. But that will be a story for the very end of this year and into 2006.
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The new Fed Chairman clearly expects to have to raise rates a bit further, but the extent of the tightening is dependent on the relative performance of the labor and housing markets.
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the need for higher rates may now be even greater than before the storm.
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The Fed will likely ease on Nov. 6, but the Beige Book has not changed the odds, ... And it tells us nothing about the future of the economy or Fed policy.
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The Fed will deal with (the housing-jobs mix) by hiking in January and March and hoping that the housing softening will be sufficient to get them off the hook by May, though I think that's a close call.
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The Fed's minutes do not change the near-term outlook for policy despite the strong market reaction. Clearly there is some debate as to how much further tightening will be necessary, as the minutes say the number of hikes will likely 'not be large,' but 'large' is undefined. This does not read like a Fed where everyone is looking for a reason to stop.
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The Fed's chief worry is still the labor market. So long as the unemployment rate does not fall further, and clear signs of consumer slowed own emerge, the Fed will be able to leave rates on hold.
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The Fed's chief worry is still the labor market, ... So long as the unemployment rate does not fall further, and clear signs of consumer slowed own emerge, the Fed will be able to leave rates on hold.