But ... the trend in unit labor costs is still declining and I would argue that the market and the Fed will say that this is a one-time surge.
More Quotes from Cary Leahey:
A Fed move in late summer is a high probability bet right now.Cary Leahey
It's hard to say whether a company like Home Depot would be better off with a falling unemployment rate and rising interest rates or vice versa,
Cary Leahey
But I would not treat it as a sign that consumer spending is falling apart and that we will have a weak first half of the year.
Cary Leahey
The first quarter is off to a very strong start. This will dominate some of the disappointing numbers we got earlier this week, at least in terms of forecasting GDP. On the inflation front, the Fed got a little more breathing room.
Cary Leahey
Economists have to worry that if consumer sentiment remains depressed, spending could follow that down and you could have a much weaker outcome (in terms of economic growth.
Cary Leahey
You got a favorable surprise on the CPI. We had the first decline in the core rate in 21 years, ... It just reminds the Fed, which said last week that the risks of inflation and deflation were almost equally balanced, that you still have some very residual deflation risk. And it ... supports the notion that the Fed might not have to raise interest rates at all next year.
Cary Leahey
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