>>The old measurements aren't reflecting the productivity gains we know have to be out there. Greenspan said as much in a speech earlier this year in which he pleaded with the academics to give him new tools to use to make his decisions.<<
In the last few weeks, though, the Fed has admitted that they
are definitely seeing the productivity gains in the productivity
numbers. That's one thing holding them back from raising - to
a certain extent, they admit to a mild version of the
'new era' thinking.
But, the 4.2% GDP has taken them by surprise. Their thinking
now is that the productivity numbers may have to be even higher
than what they've seen - and that may be hard to do.
My personal opinion, is that the Fed has lots of pressure to
make sure they at least make a VERY CAREFUL/CAUTIOUS DECISION
about interest ratest because the stock market is probably
the main reason for the BUDGET SURPLUS. Congress, President,
all politicians, the 'average joe', they all just love
this new feature.
In fact, I just read a few minutes ago, that what's partly
holding rates steady. Because of the budget surplus, the
Treasury will possibly anounce that there will be
less auctioning-off of T-Bills, so less supply is for the
moment keeping yields low.
All this uncertainty now makes the friday unemployment
number more important than before. Interest rate fear
replay of last week. |
