Thursday, February 3, 2011

Key indices point to a stronger economy and more inflation this year

This week's data have included two back-to-back "blowout" numbers, both from the Institute for Supply Management. Activity in both the service and manufacturing sectors is really picking up, and more than expected. Today we learned that almost two-thirds of service sector companies—comprising the lion's share of the economy—report seeing a pickup in business activity. And as is the case with the manufacturing sector, a majority of businesses are hiring new workers, and a large majority report paying higher prices. All the numbers from both sides of the economy have moved up significantly in recent months. At this rate, it would appear inevitable that the economy is going to enjoy stronger growth and more inflation this year than last year. Once again, today's reports should be ringing alarm bells at the Fed, where FOMC governors should be realizing that the time to take your foot off the accelerator is way before you need to start applying the brakes.

1 comment:

Benjamin Cole said...

I don't care what anybody says, I want a roaring economy for at least several years. Give us prosperity.

Booms are good for investors, workers, citizens, everyone.

Some moderate inflation is fine with me. Sheesh, inflation ran as high a 6 percent, when Reagan-Volcker was declared an anti-inflation fighter duo supreme.

Now, we could have a debate on whether there is any inflation.

Go, go, go economy.