Ethan Harris
Ethan Harris
agree attention chairman comments gap itself last might number raised reserve smaller start trade week
The number itself wasn't very surprising, ... (Federal Reserve Chairman Alan) Greenspan's comments last week that the trade gap might start getting smaller raised attention and some hopes. But I didn't agree with him about that.
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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.
aggregate attention clearly creation equity fed focus focused stock wealth
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.
across auto collapse component growth incentives knew major months number rest row sales single stop weak
We knew we would have a very weak number because of a collapse in auto sales after two big months in a row and the incentives kind of stop working ... But if you look at the rest of the report, every single major component was up. It was very broad-based growth across many components.
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Ultimately, for the economic recovery to sustain itself, we have to see the labor market improve. As the tax-cut benefits fade, consumers will look for more fundamental reasons to spend money, and there will have to be some job growth.
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What we're looking for is evidence of the corporate side of the economy gaining confidence and making real commitments in its own spending. There, I'd say the news is at best mixed,
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Only with very weak U.S. growth or a major drop in the U.S. dollar will the trade deficit improve on a sustained basis. The reason you need these dramatic movements is that the U.S. has, according to almost every study, an incredible appetite for imports.
case economy functions good help quite
If we have an economy that functions O.K., with a little help from the Fed, in that case gridlock is quite good for the market,
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More and more of the job losses are in industries that are effectively closing down domestically. This has been a gradual process since the 1950s, but it seems to have accelerated.
entering uncertain
Now you are entering a much more uncertain period.
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We needed 20 percent economic growth in the third quarter to get rid of all of the excess capacity in the economy. The Fed is still going to be concerned about disinflation.
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Obviously we have a pretty weak economy and this was not unexpected. We knew they were going to have to revise it downward.
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Our feeling is that because you have a new central banker, they are going to want to err on the side of restraint against inflation.
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Usually the federal government takes a much more limited role in natural disasters.