Ethan Harris Quotations | Page 2

The best tack is to move by a quarter point, with the promise that there will be more cuts to come if the economy remains weak. You can't maintain that promise with big bulky rate cuts.

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

The adjustment to higher prices has been fairly orderly. It's not a 70's style shock. Oil prices do have an effect on the economy but it's not dramatic. It's a problem but not at the top of the list.

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

They'll wait to see how Christmas shapes up, and if it's weak, they'll give another rate cut in January.

They keep fiddling with the language, and the general tone of the directive keeps getting a little less dovish. Being 'patient' sounds a little less like they're keeping rates on hold than a 'considerable period' -- though you'd need to study a dictionary closely to figure that out.

There's this alternative scenario where the financial crisis starts to bleed into the economy in a major way,

The retail sales report is a little bit misleading,

At the national level, the Fed has to worry about the inflation implications of the storm.

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 labor market's going to have a long, slow climb. Corporate America is going to use whatever means it can to boost output without hiring. They're going to wait and wait for confirmation that growth is really picking up before they move into serious job hiring.

The Fed is saying that 'we're being tested here, we're being tested on our anti-inflation credibility,' ... They need to sound tough. They need a pretty good bark to go with their bite.

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 Fed is going to have a bias to be very easy in terms of policy, not just in the next couple of months, but well into the future.

The Fed has made it clear that it will take quite ugly news to get them to move in advance of any clarity around the Iraq situation. That means the March 18 meeting seems too early to expect a cut.

The Fed's kind of locked into this cautious optimism mode. Everybody there has the same line about how once geopolitical risks abate things will get better.

The Fed's announced an endgame for monetary policy.

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.

I'm not sure I believe the Labor Department. On Friday, there must have been a below-normal number of people applying for benefits.

In an ideal world, three simultaneous gradual adjustments would happen. The U.S. eliminates the budget deficit, China revalues by 30 percent and China works to rebalance growth more to consumption and less to exports. Of course none of this will happen and the pressure for protectionism from Congress grows.

If job growth is just 50,000 a month, you can be sure that the unemployment rate is going to rise at some point in the coming months.

If you're doing budget planning in business, you budget for the downside risks, not for the most optimistic scenario. But the federal government doesn't have to worry too much -- it's the only business that has a blank check.

In total, we learned very little about the future of the economy or Fed policy except that the Fed is not ready to hike rates in the very near future.

In the preliminary reading an increase in the index of current conditions was offset by a decrease in the expectations index. We expect a similar breakdown in the final survey.

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.

In terms of being a predictor for the national index, the Chicago number has a spotty record.

Clearly the new focus of Fed attention is the stock market. The Fed is not focused on many of the indicators equity analysts emphasize. Instead, the Fed's focus is on aggregate wealth creation in the market.

Clearly the new focus of Fed attention is the stock market, ... The Fed is not focused on many of the indicators equity analysts emphasize. Instead, the Fed's focus is on aggregate wealth creation in the market.

Clearly the economy still has plenty of momentum with a little hint of inflation risk in the background.

Clearly, Corporate America is still in hunker-down mode, reluctant to increase budgets for equipment and slow about increasing employment, ... That puts a weight around the neck of the recovery and keeps it at a moderate pace.

Housing prices tend to turn very slowly, and that delays whatever impact they might have on the economy.

Because growth is looking good and financial conditions are good, they'll keep moving up. But they're close to the end.

By talking about interest rates rising again, you can precipitate them rising too early in a recovery -- that's why he shouldn't be talking about it.

I don't think this should alter anybody's views about the Fed in a major way.

Coming after the energy shocks and Katrina, it's a remarkable spring-back. The economy seems to have an underlying resilience.

For the Fed to hike rates now would be the equivalent of a doctor prematurely declaring a patient at full health, discharging them from the hospital and then forcing them to run a mile.

The indicator that economists use to predict the housing market is the affordability index -- the ratio of monthly income to monthly mortgage payments. As the economy picks up, the typical family's monthly income will slowly accelerate, but the monthly mortgage cost is quickly jumping, much faster than income could possibly move.

The idea that the recovery has started has been clearly confirmed. But there's no way to know the sustainability of the recovery.

You want to get your house in place before financing costs go up.

The economy is one ugly event away from contraction.

The combination of still-strong growth and rising inflation has prompted a string of hawkish Fed speakers all arguing strenuously for the need to keep inflation contained,

The markets have forgotten two lessons from prior natural disasters.

The markets are going to be a bit uncertain as to how to react, given that the Fed is waiting in the wings. They are all going to be looking ahead toward the FOMC meeting to see what the Fed's verdict is on the data rather than reacting as it comes out. They'll be sort of holding their breath.

The market has some adjustment to do, but it will be more of a slow leak than a pop.

The market is kind of like a four-year old kid in a toy store,

The market is getting lulled into sleep here. In reality we think that both the inflation numbers and the growth numbers will keep the pressure on the Fed.

The main thing holding back the economy in the past year and a half has been a lack of business confidence, and now we're seeing these surveys with a fairly optimistic take on the economy. The non-manufacturing survey certainly reflects the general increase in confidence, and that's a self-fulfilling thing.