Ethan Harris Quotes (103 Quotes)

Even in a healthy economy, you have layoffs, ... The Challenger number is more useful as a story telling device than an indicator.

You probably want to subtract about two-tenths of a percent from first-quarter GDP growth. But that's looking like very old history, with the Fed having eased twice since the first quarter. From the market's perspective, you feel like you're in a different world already. The first quarter looks very distant, indeed.

Imagine you're a bank. The corporate sector isn't interested in borrowing, so you can't lend to it. So where do you go Well, mortgages. They pay a reasonable rate. They're seen as a safe investment. Load up on mortgage-backed securities.

They're adding to the intellectual firepower of the board of governors in terms of regulatory and financial markets issues, but initially they won't be important players in the monetary policy front.

It's not a question of a sudden explosion in prices. It's more an erosion of the low-inflation psychology.

This is a feel-good report. When you get a strong growth number and a low inflation number, it's hard to get a better combination than that for the economy.

The labor market's going to have a long, slow climb. Corporate America is going to use whatever means it can to boost output without hiring. They're going to wait and wait for confirmation that growth is really picking up before they move into serious job hiring.

The economy is one ugly event away from contraction.

You don't want to force the new chairman to open his term by having to make a a 50 basis point rate hike.

Rubin was a great Treasury Secretary. Nobody in the Bush administration comes close.

Payrolls were well below the whisper number, so there's been a big sigh of relief in the market,

Fed officials ... likely anticipated some fallout in fixed income markets, ... We believe ... that Fed officials wanted to signal a greater probability of tightening in 2004 than had been priced into markets.

There is a history both in appointments under the Bush administration and the Fed chairmanship itself of people off the list being picked. Bush does seem to have a proclivity to pick people with a more business background for his economic positions,

The U.S. pointing to China is a bit like the pot calling the kettle black. The deficit with China reflects poor policy on both sides of the Pacific.

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.

Thus we are bumping up our growth and Fed call. We now expect the funds rate to peak at 5.5 percent at either the August or September FOMC Federal Open Market Committee meeting.

This has been a fundamental problem with the Fed's whole approach to policy making, ... By changing their language so frequently, they make it impossible to figure out what they're doing.

When you get a new chairman in place you're going to have a more democratic and less predictable, less transparent Fed. The new chairman won't get the same automatic respect Greenspan has. It's not that (central bankers) will turn into a bunch of farm-yard animals, but there will be a more normal discussion going on.

Companies have been able to maintain incredible productivity growth for a low-growth economy. It does look like firms are finding ways to use technology and make do with fewer workers.

The number itself wasn't very surprising, ... (Federal Reserve Chairman Alan) Greenspan's comments last week that the trade gap might start getting smaller raised attention and some hopes. But I didn't agree with him about that.

Nobody thinks the risk of inflation is equal to the risks of recession -- all indications are on the down side. The only way to rationalize this is that Fed Chairman Alan Greenspan wanted a half-point cut, and to get a unanimous decision, he had to go to a neutral statement.

This is why people talk about radical moves down in the dollar. They just can't see an improvement of the trade balance happening any other way.

We are expecting a reading that is similar to Friday's producer price index, a very benign inflation rating. Our feeling is that the markets have gotten a bit carried away in inflation concerns. They've heard Greenspan say that inflation is showing up on the radar screen and they're waiting for it to show up any day now. But the inflationary picture remains just as good as ever.

Before the war, consumers were doing OK, but the corporate sector didn't want to get going, ... We're back to the same environment. You see it in surveys of CEOs -- they just aren't convinced that now's the time to start expanding their business.

It's true there's been a shift of income distribution, with a lot of income gains accruing to upper income individuals. The labor market is paying a bigger and bigger premium for being well educated, ... At the other end of the distribution, if you look at Joe Six-Pack, you've seen a big decline in big paying, low skill jobs in manufacturing.

The combination of still-strong growth and rising inflation has prompted a string of hawkish Fed speakers all arguing strenuously for the need to keep inflation contained,

We reached the point where we don't trust our model anymore. That's why we were below the consensus.

Even with a positive outcome in the war, the economy is going to have lost a lot of momentum by the time it's over. We're not going to see a few weeks of weak data -- we'll see a few months of weak data.

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.

The Fed is going to take a cautious approach (because) they're worried about how the consumer will handle higher interest rates, ... We've had recovery nurtured on super-low interest rates. They don't want to shock the patient by withdrawing the medicine too quickly.

From the market perspective, there's a big difference between 6 percent and 5.8 percent unemployment, especially since there's a lot of talk out there that maybe a recovery is at hand.

Because growth is looking good and financial conditions are good, they'll keep moving up. But they're close to the end.

By the fourth quarter, you will continue to have worries about corporate governance issues, a weak stock market and a buildup to war in Iraq leading to higher oil prices -- a lot of negative psychological forces in the economy that will make it very hard to sustain growth going forward,

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.

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.

The stronger data virtually assure significant changes in the Fed's directive this week, ... The new directive will probably include a grudging acknowledgement of the stronger labor market and inflation statistics.

Usually the federal government takes a much more limited role in natural disasters.

That's the big lingering risk factor sitting out there on the horizon. Will we have a gradual adjustment, where the trade deficit gradually improves, or will we have an accident along the way

We are obviously experiencing slower growth and the payroll numbers don't really reflect that yet, which is why they will be an important indicator. Companies have been cutting back the number of hours their workers put in and in some cases cutting back their workforce altogether, and that is what people will be looking for in the numbers.

Real estate is a topic that has vaulted to center stage, ... The real reason the topic is hot and belongs on the front page of research reports is that the housing market is becoming more of an engine of economic growth, but is also the biggest risk to future growth if the boom goes bust.

The CPI number doesn't have a big influence in Fed thinking, ... This keeps policy makers comfortable where they are.

The third quarter was the sweet spot for profits from an economic perspective. You had this pickup in growth, but you didn't have the pickup in costs. In terms of growth, this is the best quarter we're going to see.

Rising rates could have a tremendous impact on slowing consumer spending. Consumer spending has been about 6 percent, when adjusted for inflation. Rising rates could bring it down to 2 or 3 percent.

This is another of these little hints that we won't get a strong employment number on Friday.

Our feeling is that because you have a new central banker, they are going to want to err on the side of restraint against inflation.

We see a number of reasons for the Fed to drop its 'measured pace' language.

The idea that the recovery has started has been clearly confirmed. But there's no way to know the sustainability of the recovery.

You want to get your house in place before financing costs go up.

Everyone is all zeroed in on the consumer now, but the truth is that the consumer isn't the driver now. Confidence is picking up, but still at average levels. Wage growth is slow and the bulk of the tax cut is already in place. Finally, with all the debt people have taken out over the past several years the burden of paying monthly bills is leaving less for discretionary spending.

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.