Paul and all,
This is from wsj:
Regions Grow Without Lifting Prices, Federal Reserve Finds
By JOHN SIMONS
Staff Reporter of THE WALL STREET JOURNAL
WASHINGTON -- The Federal Reserve's latest survey of regional
economic conditions said the economy was growing at a
"moderate to strong" pace and that there were no signs that the
strength has given way to inflation.
Indeed, the economy may be beginning to cool down a bit. In a
separate report Wednesday, the Department of Commerce said
orders for durable goods fell 0.6% in September after rising the
three previous months.
......
Signs of Health
Still, new orders for durable goods, items designed to last at
least three years, were 6.5% higher than they were in September
1996. And hidden in the latest month's decline are signs of
healthy business activity. Indeed, September's drop can be
attributed largely to declines in aircraft orders, which tend to be
volatile. Electronic and electrical equipment orders also dragged
down the September numbers, sliding 7.7%, after a
history-making leap of 29.4% in August.
"The headline would suggest weakness, and that's certainly not
true," said Marilyn Schaja, an economist at Donaldson, Lufkin &
Jenrette in New York. Orders for nondefense capital goods
excluding the volatile aircraft sector, considered a good
barometer of future plant-and-equipment spending, soared 6.1%
in September. "The trends we have are strong in the
manufacturing sector," said Ms. Schaja. "And this points to a
further increase in plant-and-equipment spending."
The reason those expenditures bode well? With a tight labor
pool, businesses have seen recent moderate increases in labor
costs. But many economists believe plant-and-equipment
investments in recent years have allowed firms to eke out
productivity gains, thereby reducing the likelihood that they will
raise prices.
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