Mark Vitner
Mark Vitner
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Corporate America is on the mend. The only downside of stronger productivity growth is that it means hiring is lagging. As far as downsides go, this is roughly the equivalent of eating your broccoli. It may be tough to stomach at first, but it makes you stronger and healthier in the long run.
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When the federal government increases the budget deficit it increases interest rates on everybody, so it is like a tax increase on borrowing. What that means is that mortgages will be more expensive.
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If we see an increase in rent we could really see inflation numbers pick up in a meaningful way.
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Recent trends show the price pressures are well contained, with the exception of oil, ... The core CPI rose at just a 1.8 percent annual rate over the past three months, which is slightly below the 1.9 percent year-to-year gain. That means the core CPI is unlikely to accelerate in the next few months and allows the Fed to continue its policy of just gradually pushing up interest rates.
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It either means the economy is losing momentum or the (Bureau of Labor Statistics) is losing touch what's actually happening in the economy. Right now I don't know what side to come down on. My sense is that job growth has been stronger than reported.
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The unemployment rate is likely to hang around 4.5 percent and finish the year somewhere near 4 percent. That would mean that North Carolina would be back in the familiar position of having an unemployment rate below that of the nation.
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The impact of stronger job growth more than overcomes the impact of higher mortgage rates. It doesn't mean we'll have a month like March every month. But home sales should remain strong even with mortgage rates about a percentage point above the low point.
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Inflation at the end of the day is headed higher, it's just not going to happen that dramatically this year.
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it's somewhat surprising how resilient the economy has been, despite higher energy prices.
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The biggest mistake of economists over the past 20 years ... We've consistently underestimated growth.
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They would like to raise rates, but right now, keeping rates a little too low would cause the least harm in the economy. If they raise rates after this weak employment report, people will be hollering. George Bush would be hollering the loudest.
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The federal response has been much larger than we thought it would be, ... And the money is being spent much more quickly.
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(The Fed) would rather see slower economic growth over the next two years than the return of stagflation three or four years down the road. And I think they'll do everything they have to make sure we don't have stagflation.
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The Fed will probably cut rates in both August and October by 25 basis points (a quarter-percentage point) each. We really don't know what they will do beyond that.