Word: feds
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...sharpest increase in first-time unemployment claims in two years. What this means is that although the slowing economy is seeing more people laid off, there are not larger numbers of new workers coming onto the job market. That means the job market remains tight, which makes the Fed's job very difficult...
...tight labor market actually makes it difficult for the Fed to make further cuts in interest rates. If the Fed continues to cut with unemployment at a low 4 percent, that raises the danger of wage inflation later this year. And wage inflation is the most difficult form of inflation to contain - it gets deeply embedded into the economy for years, because it often involves employment contracts. So the Fed has a tough job on its hands. It has detected enough signs that the economy is teetering on recession to make an aggressive rates cut. But we're staring...
...their workforce in a tight labor market that many companies are thinking that if this a shallow recession, they'd rather tough it out. They don't want to be left having to replace their workforce if the economy picks up quickly, which is what they're hoping the Fed's rate cuts will achieve. So we're not likely to see a quick rise in unemployment...
...view of many economists, interest-rate modifications are better than tax cuts as a way of combating slowdowns, in which case the main weapon of recession fighting would rest with Greenspan. All the same, Bush is hoping that he can get the Fed chairman to signal in some way that he too would agree to a big slice, perhaps during his upcoming testimony before Congress. Greenspan thinks the surplus should be used to pay down the national debt, but he would accept seeing some of it go back as a tax cut before he would allow Congress...
...Bush?s adviser Lindsey is a good friend of the Fed chairman?s. So are Cheney and Paul O?Neill, Bush?s choice as Treasury Secretary. Both worked with Greenspan in Gerald Ford?s White House. All of them will be going to work on Greenspan to persuade him that Congress would simply spend the surplus before it can be used for bill paying. And George W., whose father had notoriously frosty relations with Greenspan, has gone out of his way to court the chairman. A few weeks ago, after their get-acquainted meeting in Washington, he even squeezed...