The Fed will likely be scrutinizing financial market conditions in coming weeks to judge whether any war relief rally might be enhancing prospects for growth.
This forecast unrealistically assumes that discretionary spending will grow only with inflation, that all expiring tax breaks will expire on schedule -- they almost never do -- and that Congress will not enact the prescription drug benefit for Medicare that a House-Senate conference is now debating.
It's very encouraging to see a negative PPI. People just aren't in the mindset to expect prices to rise sharply.
We expect markets to focus, as usual, on headline hiring and the jobless rate. Whether these figures should be judged according to the usual principles is less clear, however.
The fact of the matter is, the economy moves in strange ways, and politicians move in even stranger ways.