October 14, 2003

More Good Economic News

More good economic news--although whether the good news is mostly about productivity, mostly about exports, or mostly about domestic investment spending is not clear:

WSJ.com - Intel's Earnings Soar With PC Chip Demand: Intel Corp.'s recovery kicked into a higher gear in the third quarter, as the big chip maker reaped big benefits from the rise in mobile computing and strong demand in Asia. The Santa Clara, Calif., company said net income more than doubled in the period ended Sept. 27, on revenue that rose 20% from the year-earlier period and record unit shipments of its microprocessor chips. Intel also forecast another healthy jump in sales for the fourth period, as well as further improvement in its already formidable gross profit margin. "It was an outstanding quarter," said Andy Bryant, Intel's chief financial officer...

Posted by DeLong at October 14, 2003 04:51 PM | TrackBack

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Off-topic: Stiglitz on trade deficits and tax cuts, URL is http://www.guardian.co.uk/usa/story/0,12271,1063214,00.html

We now return you to your regularly-scheduled good economic news.

Posted by: Charles on October 14, 2003 09:54 PM

...and some more good news. Retail sales came in a good bit stronger than expected in September. While headline sales were off 0.2% in the month (the median estimate was for a 0.3% fall), August sales were revised to +1.2% from +0.6%, so the absolute level of sales was a good bit higher than anticipated. The annulized pace of sales over the past 3 months is 12.2%, well up from the (still impressive) 7.5% 12-month gain. Consumer demand has really been motoring along.

Meanwhile, the NY Fed's Empire State index hit a record. Now, this is not the be-all and end-all of factory reports, but it is the first report out for the sector each month, and has some modest predictive power. The strength was all in orders and shipments, not in the fluffy stuff.

Posted by: K Harris on October 15, 2003 06:46 AM

And if you rework the Empire State subindices to mimic the ISM, you get a print of 60, which implies 5.5% real GDP growth.

Posted by: Ed on October 15, 2003 08:38 AM

Yeah, weird thing about ISM in this cycle - a reading of 52.5 was once a pretty good indicator that the Fed would be hiking rates soon. The latest reading was 53.7, following a 54.7, and Fed officials are still talking about steady rates for some time. Wonder what a 60 would do? OK, more realistically, wonder what a 55 would do?

Posted by: K Harris on October 15, 2003 08:48 AM

A print of 60 for the ISM could realistically come in early 2004. Fed funds futures are pricing a 66% chance of a 25 bp rate hike in March 04 with 100% odds by May.

Posted by: Ed on October 15, 2003 09:03 AM

Pricing March back in makes sense, I suppose. A few weeks back, McTeer explicitly tried to talk the world out of pricing in an H1 tightening, and had a good bit of implicit support. The chatter from Fed officials has since grown more upbeat, though they all still want job growth to improve before becoming less accommodative. The Beige Book today supports this more joyful noise from Fed folk.

Posted by: K Harris on October 15, 2003 11:44 AM
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