The Case for A Rate Increase is Still strong
Excerpt from, PORTOFOLIOS, ETC. by Jonatahn Fuerbringer
"..when the May employment report was released on Friday morning, there was a surprise. Job growth was unexpectedly weak. Instead of an increase approaching 220,000 new nonfarm jobs, as Wall Street had forecast, there were only 11,000.
'"It didn't give you closure,"' lamented Robert J. Barbera, chief economist at Hoenig & Company. '"We can't say we're done."'
****************************************************************
"The slowdown of wage increases in manufacturing had helped restrain overall wage increases, allowing the growth rate to decline while the economy was booming. That mitigating factor now appears to be gone.
The closure sought by Mr. Barbera must wait for the release of other key data ahead of the Fed's policy-making meeting on June 29 and 30. Those include the Government's formal tabulation of retail sales for May, to be released on Friday, and the Labor Department's measure of consumer prices for last month, due on June 16.
If they are strong, retail sales will serve to prove that the consumer has bounced back after a weak March and April. The consumer Price Index for May will show whether the April gain of 0.7 percent, the largest monthly jump in eight and a half years was a fluke. And if it is possible to scrutinize Alan Greenspan, the chairman of the Federal Reserve, any more closely, investors will do so on June 17, when he is scheduled to testify before Congress's Joint Economic Committee on monetary and economic policy. Many expect him to use the occasion to signal that a rate increase is coming."
From The New York Times, Sunday, June 6, 1999, BU 7
|
