There is a risk that we will push up above 2 percent, not necessarily over the next month but sometime over the next few months. That will be a concern to the Fed.
I don't think it's the case that we suddenly turn off the tap, and consumer spending stops dead in its tracks. It's more gradual.
Growth was very good in the third quarter. We really suspect that the last two reports greatly understated the underlying strength of the labor market.
It is possible that the hurricanes that hit in August and September had a bigger impact on measured GDP growth in the fourth quarter than in the third. ... The hurricanes probably dragged on investment, too.
We believe the numbers today are confirming our view that growth will be soft throughout the rest of the year.
We are now at the point where Hurricane Katrina's effects are adding to job creation rather than detracting from it.
With consumers likely to return to the malls from the auto showrooms, spending in other areas will pick up again, especially once cooler weather arrives to give a boost to fall clothing,
The goods and services deficit will continue to widen, especially since after Katrina the United States will be importing more energy products at higher prices.
The reason (recession) gets mentioned . . . is that (energy price) movements of this sort of magnitude usually would be associated with recession. So you do have to start asking the question, ... The question needs to be asked, even if we think things are different on this occasion.
There is no sign at all now that US consumers have started to tighten their belts. This will increase the chances that the Federal Reserve will continue to raise rates up until May.
Within a few months, the deficit will be widening to new records.
U.S. consumers have been increasing their spending much faster than their incomes.
Energy prices were rising before Katrina hit, and while those costs didn't make their way through to finished goods in August, we have to expect higher core inflation in coming months. Firms are saying that they've absorbed so much already that they have to pass on these costs.
Excluding autos, spending growth looks healthy -- not a blockbuster holiday season, but far better than it appeared a couple of months ago when gasoline prices were over $3 per gallon.
The trend still points to a larger deficit in coming months, especially given the recent rises in oil prices.
It wouldn't be unusual at all for them to stop and start again.
Of course, we don't know whether the price is going to stay at $3. But the longer prices stay at this level, the harder it is to believe that consumers will just carry on doing what they were doing.
Activity levels remain solid, indicating continued high demand for services. The outlook for early 2006 looks positive.
Companies have reached the limits of what they can do with their work forces. They have to hire more workers.
The bottom line is that the job market carried good momentum and the economy can weather the temporary hit from the hurricanes.
That's given them a source of funds to keep spending.
This is the unusual episode that we've had so many rate hikes in a row.
This latest report is unmistakable evidence of an improving economy. What you have to look for is evidence that the fourth-quarter slowdown in economic growth will continue. And this jobs report is evidence that just the opposite is happening.
It seems that companies are continuing to find new ways to apply advanced technology to increase output per worker. It has been really incredible how much extra output companies have been able to pump out without dramatically increasing staffing.
For a long time we've been looking for consumer spending to slow down, ... It's a question whether this is a trigger for a broader slowdown in consumer spending and the housing market.
It's interesting because the economy is growing in real terms, so you would expect to see the markets frequently posting all-time highs, because the trend is (naturally) up.
Clearly the slowdown in housing will mean slower growth in the overall economy. The big question mark is how much damage there will be.
For the construction workers, there will be probably not be so much work in new residential building, but there will be work in nonresidential building and there will also be work in reconstruction projects in the hurricane-affected areas. It's a mixed bag for construction.
The initial reaction of the market is to say that this makes it less likely that the Federal Reserve will be able to stop rising rates just yet.
These figures suggest that growth is stable but not extremely strong. These figures should add to the conviction in financial markets that the Fed will soon be able to stop raising rates.
The economy has begun 2006 with plenty of momentum.
