Economy picture is bright
Interview: Brian Westbury --- Chief Economist --- Griffin Public Stephens and Thompson
>> brian westbury, chief economist with griffin kubic stephens and thompson says it is economy picture is bright.
>> the fed is very easy. the tax cuts we put into place last year are still in place, still doing their job of boosting incentives. when those two things are together, we tend to see the economy grow rapidly. already, after weaker data in june, we’re seeing good data in july and it looks as if the economy is ready to go back on a torrid path of growth.
>> rich, what about you? you had some of the lowest estimates in terms of g.d.p. growth on wall street. do you agree with the optimistic outlook or are you more cautious?
>> i am more cautious but i think brian is right in the fact that we have an inordinate amount of stimulus from the fiscal side in the tax cuts as well as an extremely accommodative monetary policy. i suspect that the economy, however, will decelerate a little bit, just a little bit. my forecast, as you mentioned, slower on the totem poles of economists but more analogous of a car moving at 55 miles an hour, which is what my 3.5% economic growth forecast, and maybe brian’s is stronger than that and probably somewhere in the 70 mile, which is fine, but you have to remember, if i’m the low man looking at 55 miles an hour, that’s a good thing so the economy is very far from anything recessionary or anything silly like that.
>> in terms of the slower growth, the 3.5%, what is it that’s causing you to be at 55 rather than at 70? is it, for example, slowing profit growth? concern about the consumer? what causes you specifically to be more cautious?
>> i think we’re hearing from a lot of conference calls we’re listening into, and there was hessitancy around june 30, the last two weeks in the earnings period, software and tech companies saying there was a drop-off right off the cliff as far as new orders and some orders that did not go signed. so we’re suspecting that there was hesitancy with respect to the handover of sovereignty to the iraqi people as well as the unknown magnitude of the fed’s rate cut. we suspect it’s coming back, the economy―that was a temporary blip but i think there’s enough cause or reason for uncertainties in the second half that will cause us to be going on the slower side rather than the path of torrid growth which we have been on.
>> brian, jump in there.
>> i was going to say that i’m right with rich. worries about fed rate hikes, worries about iraq and potential terrorist attacks, a corollary to that and also worries about the election. we have literally in november we could have a completely new path of tax policy, of iraq policy, of terrorist policy and i think that creates uncertainty, as well. but my feeling is that with the fed so easy and tax cuts in place that these will all prove to be temporary blips and hiccups due to uncertainty and we’ll tend to go over those. corporate profits are very strong.%
>> this debate continued on the jobs front with yamarone predicting a slowdown in hiring for the remainder of the year.
>> the economy is creating jobs, they’re very good jobs, high-paying jobs in the service sector. i love anecdotal evidence. anecdotal evidence i gather when i speak in front of groups and people, hey, are you in the service economy? yes. are you employed, do you like your job? yes, are you making money? yes. what i do in the service economy, i’m doing fine. most of the people i do speak with in every aspect are doing very fine and making money so the government statistics could say one thing but the anecdotal evidence, you have to ask your neighbor, open the window. look at all the landscaping and housing stuff going on, that’s services.
>> brian wesbury says there’s nothing fundamentally wrong with the labor market , the service jobs are at management level and higher paying.
>> and the legal case against richard grasso and allan dodds frank has the latest.
>> new york attorney general eliot spitzer has filed a motion seeking to move his case against grasso back to state court. grasso’s lawyers wanted that case moved to federal court in june. spitzer said grasso was paid $190 90 million during his -- $190 million during his eight years at the nyse and wants to recover some of that. spitzer asked the judge to consider the argument that the case should be in federal court is ridiculous because it is in regard to the new york stock exchange.% he said there is no federal law with regard to the new york stock exchange and its award of compensation. he continued -- he points out that most labor disputes involving the new york stock exchange go to state court court.
>> retail sales in the u.s. have plunged to resession-type levels. that’s coming up.
