<%@ Language=VBScript %> <% Response.Write(cszCSS) %> Detailed Report
[Econoday]
Today's
Calendar
 |  Simply
Economics
 |  International
Perspective
 |  Short
Take
 |  Market
Recap
 |  Resource
Center

Simply Economics
Markets at a Glance
Recap of US Markets
The Economy
The Bottom Line
Looking Ahead


The Bottom Line

By Evelina M. Tainer, Chief Economist, Econoday     5/4/01

Economic activity appeared to weaken in March and April. Certainly the employment situation showed a deteriorating labor market which could easily dampen consumer confidence and hamper consumer spending in the next few months. The manufacturing sector remains in a slump but construction is still alive and kicking.

There is no question that the week's set of economic reports will once again cause market players to reassess their views on the outlook for Fed policy. Immediately following the Fed's surprising rate cut announcement on April 18, most bond and equity investors came to believe that the Fed would only reduce the funds rate target by 25 basis points at the mid-May FOMC meeting. Many analysts mumbled that this would very well be the final rate cut of the cycle as the economy would start to gather momentum.

In fact, the employment situation actually looks like it may get worse before it gets better. Even after accounting for special factors, it wouldn't be surprising to see another small drop in nonfarm payrolls in the next month or so given the surge in job-cut announcements.

It is likely that a market consensus will develop that the Fed could reduce the fed funds rate target by 50 basis points in mid-May. And that may not be the end of the cutting round for this cycle.

Continue



Markets at a Glance   •   Recap of US Markets   •   The Economy   •   The Bottom Line   •   Looking Ahead


Legal Notices | © 2001 Econoday, Inc. All Rights Reserved.