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Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread
VTI 329.91-1.8%Nov 13 4:00 PM EST

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To: MrGreenJeans who wrote (407)7/20/2000 9:03:11 PM
From: Justa Werkenstiff  Read Replies (1) of 10065
 
MGJ: Re: "Further, the price of oil is not as significant a measure in the price indexes as most believe."

Greenspan: "To be sure, if current personal consumption outlays slow significantly further than the pattern now in train suggests, profit and sales expectations might be scaled back, possibly inducing some hesitancy in moving forward even with capital projects that appear quite profitable over the longer run. In addition, the direct negative effects of the sharp recent runup in energy prices on profits as well as on sales expectations may temporarily damp capital spending. Despite the marked decline over the past decades in the energy requirements per dollar of GDP, energy inputs are still a significant element in the cost structure of many American businesses."

Greenspan on energy and inflationary expectations: "Moreover, energy prices may pose a challenge to containing inflation. Energy price changes represent a one-time shift in a set of important prices, but by themselves generally cannot drive an ongoing inflation process. The key to whether such a process could get under way is inflation expectations. To date, survey evidence, as well as readings from the Treasury's inflation-indexed securities, suggests that households and investors do not view the current energy price surge as affecting longer-term inflation. But any deterioration in such expectations would pose a risk to the economic outlook."
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