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April 12, 2005


-- by Dave Johnson

The stock market suddenly reversed course and shot up 140 points from its low today, so I thought I'd see if I could find out why. Apparently there was a paragraph in a Federal Reserve document in which they said they didn't think they would need to "accelerate" interest rate increases.

In that paragraph members of the committee noted that even though "the required amount of cumulative tightening may have increased, an accelerated pace of tightening did not appear necessary at this time, as a degree of economic slack apparently remained, productivity growth would probably continue to damp increases in unit labor costs and prices, and inflation would most likely continue to be contained."

For Michael Sheldon, chief market strategist, at Spencer Clarke LLC, the phrasing shows "that while the FOMC is aware that inflationary pressures are moving to the upside, excess slack in the economy combined with still solid productivity growth and contained inflation expectations should allow the Fed to continue raising rates at a measured pace over the next several meetings."

Productivity growth - meaning fewer people working more hours for the same money - will "damp increases" in labor costs.

OK, I filled up two gas tanks yesterday for a combined $70. SEVENTY DOLLARS. I just came from the supermarket where cereal is now over $6. Housing costs are increasing 20% a year here, and 20% a MONTH in places like Reno.

But LABOR COSTS (namely: you) are under control so everything is copacetic. Watch your backs.

Posted by Dave Johnson at April 12, 2005 12:45 PM

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Spot on. Thank you for this post; it sums up one of the central problems with Cheap Labor Conservatives.

Posted by: Michael Miller at April 12, 2005 2:11 PM

Find a food co-op and stock up on your staples and make sure to spend the rest of your money with companies that live up to your values!

Posted by: grannyinsanity at April 12, 2005 3:31 PM

Contained inflation expectations? What in Hell are they talking about?

Posted by: MJ at April 12, 2005 3:32 PM

I paid $62.00 for a tank of gas three days ago.

89 octane.

Posted by: Movie Guy at April 12, 2005 4:29 PM

Excellent post, Dave! And enlightening re 'econospeak' as well.

Posted by: Helga Fremlin at April 12, 2005 6:14 PM

Aaaaahh, the old republican philosophy:

I got mine fuck you.

And their health care plan:

Don't get sick, and if you do die quick.

Jesus fucking Christ, can we get rid of these goddamned assholes soon?

Posted by: Vinnie at April 12, 2005 7:07 PM

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