My belief all along is the unemployment rate is the key to consumer behavior, ... A 4.5 percent unemployment rate would be more than a half a percentage point above the low of 3.9 percent. If unemployment goes up a half percentage point from its trough, you almost always get a recession subsequently in the next 12 months. There is a snowballing effect that begins to happen once you get too much past that size increase. While it might take a nice round 5.0 percent rate before people get panicked, the snow may already be rolling over them by then.
More Quotes from David Orr:
We're much more upbeat now than a few weeks ago when there was a sort of creeping anxiety.David Orr
The report will not comfort the Fed, despite the good headline data, ... The news further back in the pipeline was not good.
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As is evident, a clear deceleration appears to be underway, ... The gain was not large enough to recoup the 13.1 month-over-month decline in July.
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We have often noted the Fed tries to choose a policy action that minimizes the consequences of a mistake. Which would have the least negative consequences today easing too much and setting off an excessively strong rebound or easing too little and allowing the economy to slip back into recession We would vote for the former.
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For the past six months we've all been wondering when consumers would come back down to earth from their stratospheric orbit. It looks like it's finally happened.
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It does fit in with Fed Chairman Alan Greenspan's perception that we're past the peak of consumer spending binge, ... He doesn't want consumer spending to be slow, but he wanted it to back off from stratospheric levels.
David Orr
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Based on Topics: People Quotes, Snow Quotes, Unemployment QuotesBased on Keywords: panicked, snowballing, trough
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