Record-high profits, combined with solid economic growth and rising capacity utilization will translate into robust capital spending - all good news for the industrial sectors of the economy.
The good news for the U.S. is that growth has diversified. We aren't just relying on the consumer and housing.
Once you take out the impact of Hurricane Katrina, demand for manufactured goods remains pretty robust. The underlying strength in the economy is still pretty good.
The labor market is growing at a pretty good pace. We're clearly seeing a rebound in the economy from the soft spot we experienced in the fourth quarter, and I think we'll see payroll growth similar to last year.
The fact that we're not getting a spillover into the rest of the economy is pretty good news. The question that core inflation asks: Is the price of everything going to go through the roof? So far the answer is no.