This report was very encouraging. It gives us stronger employment growth than the market was expecting while none of negative side effects of economic growth are present, such as higher inflationary pressure from wages.
The bottom line is, the labor market is going to continue to show further deterioration, not because it's getting worse, but because of mechanics. As the unemployment rate gets higher, the consumer is going to consider that.
It's a little disappointing to see core up that much. I was hoping for surprise on the downside for core as we got in the PPI (Producer Price Index) yesterday.
It's a little disappointing to see core up that much, ... I was hoping for surprise on the downside for core as we got in the PPI (Producer Price Index) yesterday.
Although the current growth environment is not impressive, positive growth is still positive growth. On the darker side of things, however, we must admit that the economy still lacks the growth momentum needed to correct many of the labor market ailments.
The consumer credit-to-disposable income ratio is much higher than it was in the '50s, so you can't argue that there is as much excess capacity on the borrowing side as there was in the '50s,
There's always that danger that the Fed gets impatient here. But I think that most of the Fed governors today feel that gradualism is the best policy, because if they err on the side of doing too much, the price of being wrong is not so high.
There's always that danger that the Fed gets impatient here, ... But I think that most of the Fed governors today feel that gradualism is the best policy, because if they err on the side of doing too much, the price of being wrong is not so high.
Outside of energy, the consumer is fine. That's why growth this year will be weaker than last year, and it will be weaker next year than this year.
I think this is the best of all possible worlds for the Fed. They'd like to see the economic expansion sustained without the side effect of higher inflationary pressure from wages.