Word: shepherdson
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Dates: during 2001-2001
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...economy? Well, a few economists - Ian Shepherdson of High-Frequency Economics and Ed Hyman at ISI Group Inc., if you're keeping tabs - tell the Wall Street Journal the recession has already bottomed. Consumer spending, even among the unemployed, will be stronger than we think, they say - and though the recovery will be indeed be slow, it may have already begun. The National Association of Purchasing Managers, on the other hand - these are the people who are responsible for that all-important rebound in capital spending we're waiting for - reported the results of their 62nd semiannual survey Tuesday...
...recovery starts right here," gushed Ian Shepherdson, chief U.S. economist at High Frequency Economics, to CNNfn, and who knows, he might just be right. Stock-watching cynics still want those rich folks to dump equities en masse in a vale of tears - it?s called capitulation - before they turn bullish, and Lord knows they?ve been the smart ones for the better part of a year...
...that could prove to be a dangerous game since jobless workers are hardly big spenders. "If you really scare consumers," Dudley says, "then you have this whole downward dynamic of job losses leading to lower consumption leading to more job losses." Concurs Shepherdson: "The next stage of getting consumer confidence substantially higher is going to be the struggle against the head wind of rising unemployment...
...even with joblessness spreading and factories operating at just 77% of capacity--the lowest level in a decade--Shepherdson said consumers are growing nervous about future inflation thanks to soaring gasoline and electricity prices and a surprisingly strong housing market. "Surveys of consumers suggest that inflation expectations have risen quite substantially," he says. And he is concerned that the Fed's rate cuts could leave the impression that the central bank no longer fears inflation--a perception that could cause companies to agree to demands for big wage hikes...
Looking further ahead, TIME's board expects the Fed to resume its anti-inflation stance as the economy recovers and raise interest rates in 2002. According to Berner and Shepherdson, the central bank may do that as soon as next spring. While higher rates would raise the cost of mortgages, car loans and credit-card debt, they would also signal to Americans that the sharpest slowdown in a decade is behind them. It may be safe to feel more exuberant again...