The big surprise about the US economy is that the consumer is not really all that strong.
Job losses have taken their toll. And, the bad news from Iraq along
with near two dollar gas is a REAL DOWNER!
And, did I mention DEBT! Out the wazoo for many people.
Addtionally, there is very little pend up demand. People have got to
be running out of storage space! Where are they putting all that
stuff they buy? Is the garage too full to park the new car yet?
NOTE WELL: A DECLINE IN CONSUMPTION THIS SUMMER COULD BRING
DISINFLATION BACK FAST! AND STOP ANY FED ACTION.
And NOW, with China tapping the brakes on it's economy?
Well, we could be back in the DEFLATION SOUP faster than you can say
ALAN GREENSPAN!
While corporations have had a period of profit windfall, with ultra-low rates and downsizing and offshoring;
Many CEO options are now back in the money. But alas, that is not
the "real economy."
MY HUNCH IS THAT BY SUMMER THE WEAKENING CONSUMER WILL STOP THE FED COLD!
AND, ANY WIND-DOWN OF THE INCREASINGLY OBVIOUS DISASTER IN IRAQ;
ALONG WITH SOME HEART FELT "MEA CULPAS" BY DUBYA, RUMMY, WOLFIE AND OTHER RESPONSIBLE PARTIES;
WE COULD "STABILIZE" THE MIDDLE EAST. AND REDUCE THE "RISK FACTORS" IN OIL PRICES CONSIDERABLY.
Of course, the lunatic fringe, Sharon, Osama, etal, will still be
raging at the moon. As usual!
But, the increasing prospect of a BOND FRIENDLY KERRY PRESIDENCY
could give The Fed the leaway it needs to put ANY rate hikes on the back burner indefinitely or at least until long after the election.
Postscript: I find it hard to believe that the Fed would monkey with rates during a presidential election anyway. Especially this election; where you'll be damned and blamed no matter what you do!
http://www.bea.gov/bea/newsrel/pinewsrelease.htm
