At the end of the day, we are seeing a bit of a softening in forward momentum.
What this, in conjunction with the April unemployment report, shows is stabilization in the labor market and timid improvement. By no means are we talking about a roaring improvement in the labor market.
You are seeing a major price correction, and it is being blamed on anything you see, including ... inflationary pressures.
If the hurricane does not derail the expansion, then against the backdrop of continuing strong domestic demand growth and fiscal policy becoming expansionary, monetary policy will have to become much less accommodative.
At the moment, post-hurricane, we have to view fiscal policy as being turned to be even more pro-active than before.
The Fed will continue to raise interest rates. We think they will do so twice more.
The inflation outlook remains very, very comfortable and certainly based on these numbers the Fed should feel very much at ease with current monetary policy.
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