Steven Wood Further Quotations

Unless there is a quick rebound in sales, this suggests further weakness in production and declines in inventories over the months ahead.

Retail sales have slowed over the last six months in response to the slower pace of job creation, higher rates, and increased volatility in the stock market. Indeed, in the past two years there has been tight relationship between the Nasdaq and retail spending, suggesting further spending weakness in coming months.

Some of the December strength and January weakness appears to be related to Y2K precautions; the (Federal Open Market Committee) will need a lot more evidence of a slowdown in consumer spending than this to convince them that further tightening is not warranted,

We still expect economic activity to slow over the next several quarters as consumer spending slows further and housing declines more because of higher interest rates and energy costs. The absence of inflation will be welcomed at the Federal Reserve.

There are a few tentative hints -- higher new orders, a drop in the inventory-to-sales ratio -- that the period of maximum weakness has likely passed. Although further declines in output are anticipated, the rate of decline should gradually diminish.

What they did imply was that future Fed actions will become even more data dependent, Further tightening cannot be ruled out.

With last week's Fed tightening, mortgage rates have continued to rise, so that further declines in housing activity are likely over the balance of the year. Nevertheless, robust labor markets and rising incomes have helped sustain housing at a relatively high level.

Even as the pace of layoffs has ebbed, no new hiring is taking place, so continuing claims will rise even further and surpass their peak in the last recession. Labor market deterioration is continuing with no end in sight.

The Sept. 11 terrorist attacks seem to have had little impact on the factory sector so far. However, many industries have already reported further production cuts as demand has waned. A more substantial contraction is expected next month.

These data indicate that the manufacturing sectors of the economy are still reeling from slowing demand and bloated inventories. Further declines in output are likely.

Despite some better-than-expected data over the past two weeks, this report is sufficiently gloomy to force the Fed to ease next Tuesday and retain their bias toward further economic weakness.

Although the level of sales is still relatively high, the solid growth of the past three years has been arrested, helping the Fed's efforts to slow the pace of economic growth. However, mortgage rates have declined over the last six weeks, so further substantial weakness may not be forthcoming.

The (Fed policy makers) will welcome this data as providing further confirmation that the slowing of economic growth in Q2 (the second quarter) has been extended into Q3,

Higher interest rates have been weathered by home buyers through the use of adept home financing techniques. Nevertheless, the resilience in the housing sector will support further monetary tightening by the Fed.