Price pressures appear to be building at crude PPI levels, but the Fed will likely wait to respond until these pressures filter into the consumer price index. We do not expect that to occur until next year.
More Quotes from Maury Harris:
Difficulties of seasonally adjusting the retail sector around year-end suggest that the two-month average -- about flat -- is a more reliable gauge of hiring trends.Maury Harris
You typically see a rebound in the labor force when the economy starts to recover. But because businesses are operating so much more efficiently, there's a limit to the number of jobs available. Unemployment could still go up a few ticks.
Maury Harris
We are seeing a 'soft landing' rather than a 'hard landing' in consumer spending for a couple of reasons. First, although job growth is slowing, wages are still rising, with average hourly earnings up 0.4 in October. Second, despite recent stock market turmoil, consumer spirits are holding up reasonably well.
Maury Harris
Combined with a steady jobless rate and a modestly higher stock market, we believe economic growth is sufficient to keep the Fed on hold for now.
Maury Harris
The recent declines in existing home sales corroborate the slowing in other housing-related data. We expect additional slowing in the housing market, including prices, in 2006. In turn, the cooling will probably result in a moderation in overall growth.
Maury Harris
With consumption accounting for about 70 percent of GDP, the extra strength should add about 0.7 point to total GDP growth.
Maury Harris
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