posted 04-27-2000 11:28 AM           

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quote:

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Originally posted by JHirsch:
A question for all you economics gurus.
If GDP rose more slowly than expected, shouldn't that be a deflationary sign rather than inflationary?

Or maybe the inflation predictions mostly come from this report:
"the Labor Department reported that labor costs rose at a 1.4 percent annual rate in the first quarter, above the 1 percent gain registered in the fourth quarter and economists' predictions of a 0.9 percent increase."
Wow! Do economist often miss the mark by that much?
those numbers certainly confused the market this morning. Down 130 and now up 30...?
I guess investors are as confused as the economic numbers...
Jake

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I'll try to be a guru for the day. I watched CNBC this morning when the numbers came out and what the pundits seemed to say was that Greenspan looks closely at the ECI number and that was going to weigh heavily on his decision to raise rates--so while the GDP numbers may be deflationary, the two announcements combined to suggest a return of inflation and a probably rate hike.

As far as economists missing the mark, I think it is harder for people to estimate an entire country's spending habits than to guess at one company's earnings (as an example). That's just my guess--and those EPS estimates are always off too.

However, the really interesting economic question in my mind is: do the old rules still apply. People in the technology world are arguing vociferously that the high growth rate is caused by rapid increases in productivity--meaning we shouldn't be worrying about inflation so much. Similarly, the old estimates of NAIRU (the amount of unemployment required to keep a normal rate of inflation) are not valid because of the way technology has changed things.

So, are we really in an economic revolution? Should investors throw out the old ideas that economists are wedded to? How long will it take for the economists (Greenspan) to change their views if this is a revolution?

posted 04-27-2000 10:28 AM         

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A question for all you economics gurus.
If GDP rose more slowly than expected, shouldn't that be a deflationary sign rather than inflationary?

Or maybe the inflation predictions mostly come from this report:
"the Labor Department reported that labor costs rose at a 1.4 percent annual rate in the first quarter, above the 1 percent gain registered in the fourth quarter and economists' predictions of a 0.9 percent increase."
Wow! Do economist often miss the mark by that much?
those numbers certainly confused the market this morning. Down 130 and now up 30...?
I guess investors are as confused as the economic numbers...
Jake

posted 04-25-2000 06:48 PM         

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U.S. consumer confidence slipped in April for the third-straight month, but optimism about the future brightened pointing to more strong growth ahead, the Conference Board said. (source: MSNBC) http://msnbc.com/news/399421.asp

-- Sales of existing homes rose in March for the second month in a row, suggesting that Americans aren't being sidelined by an upswing in mortgage rates.

posted 04-24-2000 04:04 PM         

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The booming economy and capital gains scored by investors in last year's soaring stock market are boosting tax revenue so much that the federal budget surplus could jump another $40 billion to reach $210 billion, according to financial analysts. (source: Washington Post) http://www.washingtonpost.com/wp-dyn/articles/A53076-2000Apr20.html

Thinking about how consumer spending is affected by the bear market, and how that will in turn effect the economy.(sources: LA Times and The Industry Standard) http://www.latimes.com/business/20000421/t000037675.html http://www.thestandard.com/article/display/0,1151,14378,00.html

posted 04-20-2000 07:08 PM         

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China announced that it had officially finished restructuring the state phone giant China Telecom -- a symbolic triumph for competition in one of the country's most guarded and crucial sectors. (source: SJ Mercury Center) http://www.mercurycenter.com/svtech/news/breaking/merc/docs/016445.htm

The 30-year government bond rose in an abbreviated trading session as the Treasury bought back an additional $2 billion in long-term government securities. But shorter-term bonds fell as a surprisingly strong job market added to expectations that the Fed will raise interest rates. (source: Washingon Post) http://www.washingtonpost.com/wp-dyn/articles/A50831-2000Apr20.html

posted 04-19-2000 06:17 PM         

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The Euro fell to 94.14 cents in European trading, down from 94.81 cents yesterday. By midafternoon in New York, the euro traded at 93.92 cents, after dipping below its previous low of 93.90 cents. http://www.msnbc.com/news/397203.asp

The U.S. trade deficit soared to a record $29.2 billion in February as demand for foreign oil hit an all-time monthly high while export sales fell. (source: Seattle Times) http://www.seattletimes.com/news/business/html98/trade_20000419.html

posted 04-17-2000 11:28 AM         

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"Evolution of our equity markets" - Testimony of Fed Chairman Alan Greenspan before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate on April 13, 2000. http://www.bog.frb.fed.us/BoardDocs/Testimony/2000/20000413.htm

The Labor Department said Friday that the March CPI rose at its fastest rate in almost a year, sparking a massive sell-off in stocks as investors feared the inflationary data would trigger another interest rate hike by the Federal Reserve to cool off inflationary pressures. The CPI gained 0.7%, exceeding the 0.5% increase of a month earlier and the 0.4% jump anticipated by analysts. Has inflation returned to the U.S. market? (source: CNNfn)
http://www.cnnfn.com/2000/04/14/economy/inflation

Federal Reserve Board chairman Alan Greenspan warned investors on Thursday that the resiliency of the nation's expanded equity trading systems has not been fully tested, despite recent volatility in stock markets. (source: Wired)
http://www.wired.com/news/politics/0,1283,35648,00.html

posted 04-14-2000 06:30 PM         

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Causing some of the carnage in the markets was a higher than expected CPI report -- evidence that the long vacation taken by inflation may be over. (source: CNNfn)
http://cnnfn.com/2000/04/14/economy/inflation/

Banks must set aside more reserves to help insure themselves against a nasty drop in financial markets that will "inevitably" occur from time to time, Federal Reserve chairman Alan Greenspan said. (source: Wired)
http://wirednews.com/news/politics/0,1283,35687,00.html

posted 04-13-2000 07:08 PM         

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Fed Chairman Alan Greenspan warned that the resiliency of the nation’s expanded equity trading systems has not been fully tested, despite recent volatility in stock markets. (source: MSNBC) http://www.cnnfn.com/2000/04/12/companies/microsoft

U.S. wholesale prices surged 1.0% in March, driven higher by rising energy costs and matching the gains seen last month, the Labor Department said. Separately, U.S. retail stores posted bigger sales gains than expected in March despite a steep falloff in new-car sales, the Commerce Department said. (source: Washington Post)
http://www.washingtonpost.com/wp-dyn/articles/A5910-2000Apr13.html

posted 04-12-2000 06:38 PM         

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In brief:
- Federal Reserve Governor Laurence Meyer said there was a huge risk of overheating in the booming U.S. economy, further fueling conviction on Wall Street that the central bank is leaning toward raising interest rates further in the months ahead.

- Tokyo's benchmark 225-share Nikkei average rose 310.69 points, or 1.5%, to close at 20,833.21, its highest level since December 1996. The Bank of Japan said the recession-bound economy has recovered in some areas, most notably in the corporate sector.

All times are EST (US)