Ethan Harris Spending Quotations

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.

Firms have cut back on their capital spending budgets to the point where some of them are not even replacing worn-out equipment. It's been quite a dramatic pullback, and in some sense there's some pent-up demand out there for capital equipment.

I think the economy is already in the process of slowing to a more moderate pace. Oil has both an immediate impact on spending and lagging impacts. Even though oil has stabilized in recent weeks, we still have to play out effects. We're still waiting for the shock value of the winter heating bills hitting people.

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

As you look down the road, at some point you've got to believe there's a real recovery in capital spending on the way. But I don't see the catalyst anywhere in sight.

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.