“The question is, How much of this feeds through all the way down the production process? Do companies end up having to swallow the cost increases or can they pass it through?”
“January auto sales were clearly much better than expected. We are on a pace to see a month-to-month increase in the seasonally adjusted sales pace, perhaps to around 17.7 million units or so.”
“We expect productivity growth to moderate, and compensation gains and unit labor costs to pick up. Just another piece of the puzzle that points toward more Fed tightening than the market currently expects.”
“The labor market is very healthy, with both jobs and wages advancing at a nice clip. This means that households will have plenty of cash to support consumption in 2006.”
“When both exports and imports are surging, that is generally a sign that the economy is in very good shape. These figures strike me as yet another sign that activity entering 2006 was on a solid footing, not about to slow down substantially, as the consensus believes.”
“Ironically, with all this strength, the net effect of these data on the fourth-quarter GDP number could be flat or possibly even marginally negative. This is because durable goods inventories were flat, which should more or less offset the positive influence of the stronger-than-anticipated December shipments figures. For first quarter GDP, however, these data are unambiguously positive.”
