Mark Vitner
Mark Vitner
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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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I think it's going to be a bad month for retailers. The news was so horrific coming out of New Orleans that it made people not feel like going out to dinner.
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People keep asking, 'How can it be that we haven't seen energy prices bleed over into the core?' ... Our belief is that it will eventually show up in the core CPI, but it may not show up in 2005. It may be in first quarter of 2006.
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What would change this is if we were to see an unanticipated strengthening in the U.S. dollar. We'd see less people coming from Latin America.
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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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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.
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The federal government is going to spend whatever they need to, to make some visible progress before next year's mid-term elections, ... And what that's going to do to an economy that's already at full employment is drive up the cost of cement, drive up the cost of steel, drive up the cost of labor.
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The Fed can't wait for core inflation to pick up before they act,
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I'm not too sure we're going to hear that much that will disturb markets, but I'm sure he'll say at least something hinting that long-term interest rates are too low,
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It's beginning to look like the Fed was right all along ... and that the case for a recession has gotten a lot weaker. It looks like we're going to have a successful bumpy landing.