Dennis Lockhart, president of the Atlanta Fed, made a nice if unsurprising speech on the economic outlook today. Abbreviated excerpts:
“As we began 2010…I was expecting a relatively modest recovery, a typical pattern following the kind of financial crisis we experienced.”
“Looking at the 2009–10 recovery, it seems clear that some of the early strength was promoted by policies that pulled forward spending from the second and third quarters of this year. The recent sharp decline in housing-related indicators following the expiration of homebuyer tax credits is the most obvious example of this effect.”
Jean-Claude Trichet, European Central Bank president, said yesterday’s decisions on future liquidity operations had been reached by “consensus”. To some ears, that might sound like there was a big split. In an Anglo-Saxon context, a consensus might be seen as simply “more than half”.
I think that is wrong. When Mr Trichet talks about a decision being made by “consensus,” my understanding is that that means there was some initial resistance but in the end everyone was able to support the final decision. It is a notch or two weaker than a decision agreed “unanimously”. Read more
Tomorrow, the Bureau of Labour Statistics is expected to say that private sector payrolls rose by only 42,000 in August, and that unemployment went up. Scrutiny of the numbers will be intense: both economic, for evidence on the health of the recovery and the Fed’s next move; and political, for insight into the Democrats’ prospects in this autumn’s elections.
But the 42,000 (or rather the likely -100,000 headline) is the difference between the 138,960,000 Americans who were employed in July and however many had jobs in August. A change of 100,000 is 0.07% and a change of 42,000 is 0.03% of the total. Read more