Dollars and Jens
Friday, December 21, 2007
the macroeconomy
Hey, that's some good NIPA:
 Apr 07     May 07     Jun 07  Jul 07\r\  Aug 07\r\  Sep 07\r\  Oct 07\r\  Nov 07\p\
7,776.5 7,796.8 7,832.3 7,861.0 7,885.3 7,931.7 7,938.9 7,984.9
9,631.8 9,684.5 9,705.6 9,742.0 9,783.1 9,832.0 9,871.4 9,982.0
The first line is employee compensation, in billions of dollars per year; the second is consumer spending. On an annualized basis, the increase from October to November is around 8% and 13%, respectively. (Incidentally, note that these are nominal data, and that the inflation report was high, too, eating most of the 8% and much of the 13%.) Interest rates were up 15bp across the board.

The fed funds futures have actually been persistently pricing in a lower rate than the target between now and the next meeting; the gap dropped about 4 to 6 bp today, depending on what you're watching. And there is still a reasonable chance of an intermeeting cut. For one thing, there are likely some calendar effects associated with the early Thanksgiving; it may be that the next report will take away some of what this one gives. For another, state unemployment claims have been rising notably, and the jobs report January 4 (I assume) is likely to give an uptick in the unemployment rate. Meanwhile, the mortgage financing situation is pulling harder than ever on consumer liquidity. Once we get through the holiday season, if the financial situation still looks as it does now and a bit more evidence of weakening has rolled in, the fed may yet want to ease conditions before things get out of hand.

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