Lara Rhame
Lara Rhame
consumers economic fuel growth optimistic positive
Consumers will keep us in positive territory, but they're not going to be optimistic enough to fuel economic growth to its potential.
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Given that the economic data will be strong, people will wonder why the Fed is not moving, which could cause some volatility in the markets. But we think the Fed will remain on hold for quite some time.
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Everybody has to learn a little more economics than they want to learn, now that we're drawing more and more of a distinction between actual GDP and final domestic demand, which is GDP minus inventories. Inventories can surprise. It's hard to make a solid forecast about them, and the Fed said that. I think the market continues to overestimate Fed rate cuts.
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We're getting to a phase where European data could have more of an impact because a solid U.S. economic scenario is so widely expected. The markets are also very thin, so traders aren't taking on large amounts of risk.
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U.S. treasury yields are rising and we've seen that support the dollar across the board. The dollar remains strong on the back of solid U.S. economic data and expectations that the 10-year yield is going to continue to go higher.
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The report is certainly better than in December, but it just doesn't reflect the level of job creation we'd expect to see at this stage of the economic recovery, or the job creation the Fed would need to see to even consider taking that first step towards tightening.
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This is yet another reminder that policy-makers don't have a lock on knowledge. There's a tremendous amount of confusion now about whether or not the recent weakness due to military anxiety is going to end up being self-reinforcing economic weakness.
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If you look at the segments of the economy where we do have deflation, particularly in the goods industry -- and particularly in durable goods, such as automobiles and heavy machinery -- that's where most of the layoffs have been concentrated, ... That's where you see the connection of disinflation to overall economic growth.
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What the current deficit does is make the dollar vulnerable. It means we could see a vicious cycle, where a declining dollar makes U.S. assets less attractive to foreign investors, which weakens our assets further, which puts further pressure on the dollar.
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I see the trade gap stabilizing, but it's hard to see it narrowing unless you get the U.S. consumer shutting down.
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Europeans' cries are falling on deaf ears. Their wish that the euro not bear the burden of readjustment will not make it into the G7 statement.
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Europeans' cries are falling on deaf ears, ... Their wish that the euro not bear the burden of readjustment will not make it into the G7 statement.
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Probably the easiest way to think about the Sept. 11 event is to think of bouncing a ball off the roof of a garage onto the driveway, ... The ball's bouncing around, and it's still unclear what the slope of the driveway is. But we can be fairly sure it's sloping up.
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People's outlook for the economy changes much faster than the underlying state of the economy. The Fed tries to keep its eye on the larger ball and not on the ping-pong ball of the stock market.