July 21, 2006
Is the economy slowing or isn't it? As usual, the answer depends on the numbers one chooses to emphasize (or ignore).
For those who still see the glass half full, this week's industrial production and leading indices offer reasons for hope. But any optimism from these dispatches were minimized by signs of cooling elsewhere, notably in the real estate sector. Indeed, housing starts fell by more than 5% last month.
In theory, a slowing economy makes it easier for the Federal Reserve to cease and desist with its current round of interest rate hikes. In practice, life's more difficult, thanks to the worrisome rise in core CPI in June, delivering the third monthly advance of 0.3%, a pace that some economists say is above the comfort zone for keeping future inflation contained.
Posted by jp at July 21, 2006 10:08 AM