Maury Harris Quotes (19 Quotes)

We now estimate that total real consumption rose at a 6.5-percent annual rate in the third quarter as a whole, above the 5.5 percent we assumed when we raised our estimate for total real GDP growth to 5.5 percent from 4.5 percent.

The bond market has been moving on two things today the movement of stocks and this speculation about the yuan.

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.

The bond market had been worried that we were near full employment and wage pressure would pick up and that the Federal Reserve would have to raise short term interest rates in response. But now that the all important employment cost index was up just 0.6 percent, the Fed doesn't need to raise short term rates because the economy is slowing down.

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.

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.

Both current conditions and expectations remain above their wartime lows, but the reversal of previous gains undercuts the notion that the slowdown early this year owed only to geopolitical concerns. Consumers are clearly troubled by the absence of new hiring, and worry about income prospects.

We believe that the Fed will require both consistent solid hiring and a rise in inflation before it begins to lift rates.

With consumption accounting for about 70 percent of GDP, the extra strength should add about 0.7 point to total GDP growth.

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.

In that context, he will lose credibility if he under-appreciates the extent to which (economic) growth is already weakening in response to earlier rate hikes.

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.

What we do know is that the system manages to work -- we've been dealing with import penetration in this country for over three decades. Over that period of time, the unemployment rate has had its ups and downs, but there's been no trend increase in unemployment.

In crafting today's FOMC statement, we believe Fed officials were undoubtedly influenced by the perception that mixed signals from the Fed, and possibly some loss of credibility, accounted for some of the recent surge in bond yields.

This puts upside risks in our forecast for 4.5-percent annualized fourth-quarter growth.

The implication is that raw winter weather may have depressed starts last month, particularly late in the month. Even so, starts remained above the 2003 average of 1.85 million units.

The contained job gains will make it easier for the Fed to convince investors that it will not rush to tighten. We still expect tightening to start only next August.

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.

Through the volatility, the trend in claims is gradually downward again, consistent with the labor market slowly starting to regain momentum after a setback in late 2002.