Ethan Harris Consumer Quotations

We've been trying to see whether the improvement of the economy and financial market will carry the day in terms of consumer confidence, or if worries about labor will dominate. It looks like the 'glass-half-full' view is winning.

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.

With few signs that consumer prices are about to break to the upside ... along with signs that aggregate demand remains robust, we expect the Fed will not only vote to keep rates constant, but will leave the growth and inflation bias statements unchanged.

You're not talking about a full-blown business-cycle recovery here, which is something like 6 percent GDP growth for a year. To get that, you'll need the whole economy operating in full-growth mode, and clearly the consumer isn't.

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 basic story of the consumer is that he's OK in the near term and at risk in the medium term.

It's very likely consumer spending will slow down significantly in coming months.

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.

The consumer is already somewhat vulnerable in the year ahead as the tax-cut effects fade. If we continue to see pressure from energy prices, consumer spending is almost sure to slow down some.

In the big oil shocks that really damaged the economy, the tax on the consumer was many times more than that, but that alone wasn't enough. You also had to have people worrying that prices were going higher forever.