In a Nutshell: "... if progress in the labor market continues to be more rapid than anticipated by the Committee, then increases in the federal funds rate target could come sooner than the Committee currently expects ... Of course, if economic performance turns out to be disappointing - then the future path of interest rates likely would be more accommodative than we currently anticipate."
If you don't like two armed economists, you will truly dislike the talk that Fed Chair Janet Yellen gave today at the Federal Reserve Bank of Kansas City's Economic Symposium in Jackson Hole, Wyoming.
The greatly anticipated speech delved into the details of the labor markets, the impact of wages on inflation and the way that monetary policy should react. Of course, being a good economist and academic, Chair Yellen discussed all sides of the issues. For example, is the decline in the participation a result of changing structural factors such as the aging workforce or is a cyclical decline due to frustration that will unwind once the labor market firms more? The answer is, of course, yes. That is, it could be one, or the other or even both, which it likely is.
KEY DATA: Housing Market Index: 55 (up 2 points)
IN A NUTSHELL: "Builders may not be irrationally exuberant but the rise in confidence is an indication that the housing market is getting better."
KEY DATA: IP: +0.4%; Manufacturing: +1%; PPI: +0.1%; Goods less Food and Energy: +0.2%
IN A NUTSHELL: "With manufacturers ramping up production, it is clear the economy is accelerating, but it is doing so without any major inflation pressures."
INDICATOR: July Retail Sales
KEY DATA: Total Sales: 0.0%; Excluding Vehicles: +0.1%
IN A NUTSHELL: "The consumer has taken a holiday from shopping."
INDICATOR: June Job Openings and Labor Turnover Survey
KEY DATA: Openings: +94,000; Hires: +92,000; Quits: +48,000; Layoffs: -32,000
IN A NUTSHELL: "Businesses are hiring and people are quitting, two clear signs that the labor market is firming."
INDICATOR: Second Quarter Productivity and Costs
KEY DATA: Productivity: +2.5%; Output: +5.2%; Real Hourly Compensation: +0.1%; Unit Labor Costs: 0.6%
IN A NUTSHELL: "Productivity rebounded, keeping business costs low as wage gains remain largely under control."
INDICATOR: Supply Managers' Non-Manufacturing Index
KEY DATA: ISM: +2.7 points; Orders: up 3.7 points: Employment: +1.6 points
IN A NUTSHELL: "The services sector is bouncing back rapidly and since that is the largest part of the economy, it looks as if strong growth is just about here."
INDICATOR: Second Quarter Employment Cost Index and Weekly Jobless Claims
KEY DATA: ECI (Private, Year-over-Year)): +2.0%; Wages: +1.8%; Benefits: +2.5%/Claims: 302,000 (up 23,000)
IN A NUTSHELL: "Wage and benefits pressures are barely starting to accelerate even as the labor market continues to strengthen."