It's just the mentality in the business community now, ... They know they have to become more and more efficient in order to keep costs down and be more competitive in world markets. I think that mentality plays a very big role in these results.
This is huge growth rate, especially for this mature phase of the business cycle. We just can't sustain this kind of growth, given the limited resources that are available, very long.
There's quite a long time before the next meeting.
The Fed is likely to make no change in its rate policy because it still see risks in the economic outlook, but I suspect it will remove its bias towards easing. Now that recovery is underway, the Fed will probably tell us the risks are a little more evenly split between weakness and inflation.
The economy is still growing very rapidly, probably faster than is sustainable, at this stage of the expansion. The fact is nobody knows for sure what it will take to stop it.
It means manufacturing is expanding sluggishly and that's probably about what we want.
The Fed won't be confused by this, in no way shape or form.
The real question is if there's a lot of damage due to the storm, that could interrupt business for a longer period of time. But generally speaking, these kinds of things are not major economic developments although they can disrupt things briefly.
I don't think it gives a gauge of Fed policy itself but it clears the deck of inflation and says the Fed can concentrate on the weak economy.
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