Stephen Stanley
Stephen Stanley
Stephen Stanley is a Canadian singer-songwriter associated with the band The Lowest of the Low. Stanley also performs as a solo artist, sometimes in collaboration with violinist Carla MacNeil...
costs currently expect fed gains growth labor market pick piece points puzzle toward unit
We expect productivity growth to moderate, and compensation gains and unit labor costs to pick up. Just another piece of the puzzle that points toward more Fed tightening than the market currently expects.
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The stock market has been pretty stubbornly hewing to the idea that the economy is slowing down and the Fed may stop soon. So to the extent that people perceive the statement as a little more hawkish, it's maybe upsetting.
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Fed officials will remain watchful for a reacceleration in unit labor costs, especially with anecdotal evidence and an upturn in average hourly earnings growth suggesting that wage pressures may be picking up.
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Fed officials have made clear that their heightened inflation concerns are related more to the outlook than the present situation. Thus, inflation fears have intensified even as core measures of prices have been exceedingly well behaved.
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Productivity rises could be more modest going forward, since hours worked should grow faster as job losses caused by the hurricanes are reversed. Fed officials will remain watchful of a reacceleration in unit labor costs.
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This speaks to very robust underlying momentum in the economy, which is one of the reasons why the Fed will have to keep going.
cause certainly core fed focused looking looks market percent reaction since
But certainly the market should be focused on the core number, since that's what the Fed looks at. We're looking for an 0.2 percent increase, which wouldn't cause a big reaction in the market.
continue fed hike measured pace rates
Barring an abrupt weakening in the economy, the Fed will continue to hike rates at a measured pace for the foreseeable future.
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If inflation doesn't accelerate much from here, and the Fed just raises rates a little more, we might see something like the end of the 1990s again. But if the Fed has to really ramp up to fight inflation, it's going to be a much worse environment than investors realize.
consistent fed signal
There is no signal that the Fed is nearing the end (of its tightening cycle), and that's been the one consistent thing.
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We think the economy will grow stronger for longer than the market and the Fed do. We look for substantial further tightening to be required.
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The minutes kind of fed into the sentiment in the market right now that the Fed is closer to done. The minutes threw lighter fuel on that one.
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We still do not look for the core CPI to accelerate rapidly, but it is likely to be persistently firmer going forward. At a minimum, core consumer price inflation will be firm enough to keep the Fed on edge and raising interest rates.
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There is sufficient upbeat news on the economy to convince the FOMC to tighten. If the economy warrants a rate hike, the Fed would be doing a great service by delivering.