Ian Shepherdson Next Quotations

With unemployment set to breach 6 percent over the next few months, people's view of the current economy is bound to deteriorate, ... But expectations are what matter for spending, and at this level the numbers suggest consumers spending will rise, albeit not rapidly.

We have no real idea what the number next week will be, but we can be pretty sure that for the next few weeks the data will tell us next to nothing about the state of the economy across the country outside the areas hit by the storm.

Mr. Greenspan said next to nothing about the current economic situation in his testimony, ... does not sound to us like a signal he has changed his mind on the appropriateness of the current level of interest rates. The rest of the testimony was a clear and unambiguous plea to Congress not to abandon fiscal discipline.

Next month, payrolls will plunge. Our guess is negative 500,000.

We think confidence will rebound next month, but in the meantime the odds surely now favor a Fed ease next week,

Katrina and Rita effects still linger, though they are fading, ... Claims will likely rise next week as the full effects of Wilma hit, but the downward trend is very clear.

Over the next few months we expect starts to strengthen as reconstruction begins on the Gulf Coast - the rise in permits may be an early sign - but elsewhere starts still need to lag sales. Demand is still huge but there are too many new homes for sale.

Overall, the survey is still very strong, but we hoped for a bit better. A further decline next month would be a bit disconcerting, but there is no reason to expect that.

Looking forward, we think there is next to no chance these numbers mark the start of a real slowing in consumer spending. The markets will no doubt take comfort from the headlines, but it is temporary relief.

This strongly suggests that core finished goods' prices will slow over the next few months,

We think there is a good chance that home sales recover, or at worst stabilize, over the next few months. The starts data are potentially seriously misleading.

We expect the index to fall over the next couple of months as the latest huge surge in gas prices bites.

We expect further gains over the next couple of months in the wake of the plunge in gasoline prices. If we're right, the data will signal first quarter consumption growth of the order of 4 percent.

At this level the index is consistent with spending growth of about 3.5 percent, in line with recent economic data. But watch out for a dip next month in the wake of the renewed spike in gas prices. Overall, though, quite robust.

As for the Fed, we look for 50 (basis points, a half-percentage point) next week.

Auto sales did not fall as far as the unit sales numbers suggested. This means there'll probably be a catch-up -- downwards -- next month.

This is great news. These are very helpful numbers to those -- including us -- who think the Fed will not raise rates next month.

Eventually, the housing slowdown will affect retail sales too, but that is probably a story for the spring of next year, at the earliest.

His conclusion, in essence, is that much of the productivity explosion of recent years is permanent, but there is a risk that there is significant cyclical element too. Unfortunately, this leaves us none the wiser as to his intentions at the next (Federal Open Market Committee) meeting.

By early next year we expect starts to have begun to decline, though activity can probably remain close to current levels for another couple of months,

The underlying trends are still adverse, however, and the deficit will rebound next month.