The Fed is trying to get us to stop listening to them and start listening to the forecast. If inflation picks up, and growth stays persistently above 3.25 percent, the Fed has more tightening rate raising to do.
More Quotes from Ethan Harris:
We think the ISM services number is one of the worst monthly pieces of data there are. On a month-to-month basis, it has no correlation with service sector employment, and on a quarter to quarter basis, it has no correlation with service sector gross domestic product.Ethan Harris
The surplus creates an environment where there's a tremendous amount of saving being freed up for private investment every time the government pays down its debt, that frees funds to flow into private investments. That has created this strong growth economy that we have.
Ethan Harris
Only with very weak U.S. growth or a major drop in the U.S. dollar will the trade deficit improve on a sustained basis. The reason you need these dramatic movements is that the U.S. has, according to almost every study, an incredible appetite for imports.
Ethan Harris
It's not as friendly as some of the other inflation numbers, but it's just one indicator. We have no inflation warning signals from any of the other major inflation indicators.
Ethan Harris
With few signs that consumer prices are about to break to the upside ... along with signs that aggregate demand remains robust, we expect the Fed will not only vote to keep rates constant, but will leave the growth and inflation bias statements unchanged.
Ethan Harris
The Fed's kind of locked into this cautious optimism mode. Everybody there has the same line about how once geopolitical risks abate things will get better.
Ethan Harris
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