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A Case for Optimism, The Economic Outlook

A Case for Optimism, The Economic Outlook. Wednesday, March 7, 2007 Richard Yamarone, SVP & Director of Economic Research Argus Research Corp. “60” and Counting – That’s Resilience. Source: Bureau of Economic Analysis. Consumers Are Quite Confident. Source: The Conference Board.

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A Case for Optimism, The Economic Outlook

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  1. A Case for Optimism,The Economic Outlook Wednesday, March 7, 2007 Richard Yamarone, SVP & Director of Economic Research Argus Research Corp.

  2. “60” and Counting – That’s Resilience Source: Bureau of Economic Analysis

  3. Consumers Are Quite Confident Source: The Conference Board

  4. Jobless Claims Still Quite Low Source: U.S. Department of Labor; U.S. Bureau of Economic Analysis, Argus Research

  5. Jobs Still Easy to Get Source: The Conference Board; Bureau of Labor Statistics

  6. Discretionary Spending Still Strong Source: Bureau of Economic Analysis, Argus Research Corp.

  7. Low Interest Rate Environment Source: Board of Governors of the Federal Reserve

  8. Incomes, Wages & Salaries are on the Rise Source: Bureau of Economic Analysis, Argus Research Corp.

  9. Inflation Well-Behaved Source: Bureau of Labor Statistics, Argus Research Corp.

  10. This Isn’t the 1950s Source: Lewis Wickes Hine, “Power House Mechanic”

  11. The Labor Market Has Changed Dramatically Over the Last 55 Years Source: Bureau of Labor Statistics, Argus Research Corp.

  12. We Don’t Do Unions Source: Bureau of Labor Statistics

  13. We Don’t Do Pensions ‘Old Time’ Labor Practices…Pension Suspension

  14. Employers Don’t Even Pay Benefits Source: Bureau of Labor Statistics

  15. Different Type of Job Creation After 9/11 Source: Bureau of Labor Statistics, Argus Research Corp.

  16. “You Can Observe A Lot by Watching”… Source: Bureau of Labor Statistics, Board of Governors Federal Reserve, Argus Research Corp.

  17. ‘Household-type’ Jobs Source: Bureau of Labor Statistics, Bureau of Economic Analysis, Argus Research Corp.

  18. Ethanol Boom is Much Bigger than Corn Source: U.S. Department of Agriculture, Argus Research Corp.

  19. Ag Prices on the Rise Source: U.S. Department of Agriculture, Argus Research Corp.

  20. Initial Stages of Higher Food Prices? January YOY% PPI… Prepared animal feeds 1.2% 12.3% Eggs 3.2% 20.0% Soft drink beverage bases 2.0% 3.3% Processed young chickens 4.6% 11.8% Milled rice 3.1% 17.2% Confectionary materials 12.5% 17.2% CPI… Nonalcoholic beverages 0.8% 2.7% Alcoholic beverage 0.9% 2.5% Frankfurters 6.3% 8.5% Flour & prepared flour mixes 0.9% 4.5% Full service meals & snacks 0.5% 3.7% Other food away from home 1.3% 5.1% Crackers, bread, and cracker products 3.2% 3.6% Source: Bureau of Labor Statistics, Argus Research Corp.

  21. Reasons for the Federal Reserve to Pause • Unknown Magnitude of Housing Downturn • (macroeconomic consequences) • Cumulative Effect of Previous Actions • (17, 25 basis point rate hikes) Argus Research Corp.

  22. Reasons for the Federal Reserve to Hike • All Inflation Measures Exceeding Purported ‘Comfort Zone’ • Commodity (Food) Inflation • (price pass alongs announced during the quarterly earning season) • Unemployment Rate at Cyclical Low • Wages, Incomes, & Salaries Rising • Import Inflation from Weaker U.S. Dollar Argus Research Corp.

  23. Reasons for the Federal Reserve to Cut • Stimulate Economy? • Send Unemployment Rate Lower? • Lower Mortgage Rates from 5.8%? • Boost Consumer Spending from 4.2%? • No Legitimate Reason to Reduce Overnight Target Rate… Argus Research Corp.

  24. Core Inflation Above ‘Comfort Zone’ Source: Bureau of Economic Analysis, Argus Research Corp.

  25. Respected Inflation Barometer Still Elevated Source: Federal Reserve Bank of Dallas, Argus Research Corp.

  26. Pricing Power Index Source: Federal Reserve Bank of Philadelphia, Institute for Supply Management, Argus Research Corp.

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