John Silvia
John Silvia
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This is really the first post-NAFTA, post-WTO economic recovery we've ever had in this country. Because of the globalization of the labor market, the relationship between economic growth and employment is different this time than it has been in the past.
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That means there is even more slack in the labor market than we had previously thought, giving the Fed even more reason to sit tight for the next several months.
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Labor costs were one of the key inflation concerns cited by Chairman (Alan) Greenspan in his latest testimony, ... Our outlook reinforces his concern.
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It does create a lot confusion and leads to different sides telling different stories -- not useful for making good public policy for the labor market,
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Today's labor market does not fit the mold of the old models. The economy has recovered, and many of the old jobs are gone.
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Inflation gains remain modest but they are gains. This suggests that interest rates will continue to rise as the Fed raises rates at the short end and bond traders discount trend growth and higher inflation at the long end.
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Increased domestic demand is now being satisfied by supply from abroad. Fewer domestic jobs have been created than the average historical experience and predicted by the models used by policy makers.
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Once that confidence is lost, foreign capital stops flowing here. We'll have much higher interest rates and a negative impact on the economy.
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On balance, I think it's the latter. In most businesses, inventories are in line with sales expectations.
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I've heard a lot of discussion the number could come out stronger. We have different models, and a couple of them have estimates where the number is higher.
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Taken together, all this employment data provides the Federal Reserve with a measure of confidence to allow an increase in the funds rate,
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Summer months can be particularly hazardous for forecasters, ... The timing of the end of the school year, seasonal hiring patterns and even weather can distort the monthly figure.
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The language will clearly be different. He'll give you a direct answer.
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The Fed is going to look at this number and go full-steam ahead with 25-basis-point increases at its next two meetings to keep inflation in check, ... This is a pretty good payroll number for September. The market dodged a bullet with this report.