Thursday, May 11, 2006

Yet Again

Just as April showers bring May flowers, in Texas in the Springtime, thunderstorms in May are generally followed by one of those pay-off days with low humidity, cooler temperatures, and spectacular sunrises. Days like today are the pay-off for living here in August.

Such a weather blessing affects everyone’s mood for the better. As I was riding up the elevator to the office this morning, an attorney in the suite next door commented how she loves this time of the year: the freshening weather, the May graduations—all in all, a time of hope and optimism. She practically levitated out of the elevator car.

I hope her mood is contagious in that office today. We all need a little positive contagion now and then.

My friend, Vince Rowe, referred to me this morning as BizRadio’s “chief economist.” I think his tongue was somewhere between a molar and the inside of his jowl when he said that. I am not a chief economist, or even an Indian (oh, please don’t take exception to the metaphor, you’ll ruin your morning.) I just play one on the Radio from time to time.

However, I do receive inquiries from time to time on my thoughts about things…a phenomenon that is both mildly amusing as well as moderately terrifying to me. What I think, and a dollar, will get you a coke in the vending machine in the basement of our building. I do observe things, and have noted a few truisms that I am willing to pass along.

The Fed raised interest rates, again, to 5% yesterday. I thought the talking heads on TV last night were going to blow out an O-ring, intoning financial catastrophe over another quarter-percent increase in the cost of money. It’s interesting when you look at the interest rate as a barometer of the economy’s strength. How high can it go?

Depends upon what you want to achieve. The Fed wants us to cool our jets a little, so they’re boosting the price of money. Since it takes several months to see the effects of such adjustments actually manifest in your life and mine, there is a fear this 16th increase could be too much. But like a hot-air balloon, the only way you can tell is to ride along and watch if the gondola is going to be carried farther aloft, or begin to sink to earth.

Another metric of our threshold of economic pain is how much we’re willing to pay at the pump for gasoline. You’d think $3/gal. would hairlip the Governor, and put all those SUV’s on blocks for the Summer, right? Driving-in this morning, some babe in a brand-new Jeep Commander was right on my tail the entire trip. (I think she was applying lipstick in her reflection from the spoiler on the rear deck of The Red Sled.) I am seeing no evidence that we’re driving less with $3 gasoline, but am noticing that public transportation passenger loads have picked up.

So figuring out that puzzle is right up there with the amateur grammarians’ quest to discern the meaning of “yet,” yet. Is it the same as “are we there, yet?” when the FOMC says “some further policy firming may yet be needed…?” Interesting, both phrases have references to destination.

Wonder if the Fed would be confused with the Dept. of Redundancy Dept. if they’d used the phrase, “yet again?” Maybe they’re holding that wisecrack for the comments following their meeting in June.

As I told a caller on the show, it really doesn’t matter right now, right away. Looking at all the economic numbers that have come out (April retail sales were higher than expected—go figure!) is like stunt driving in a Tom Cruise movie while looking in the rear view mirror. Your mission, should you choose to accept it, is to figure how to make a play to your advantage given the numbers of the moment…and knowing they’re going to change.

The pundits and grammarians can ponder the meaning of “yet” until the cows come home to roost; one thing is certain—the Fed will raise rates again. Or it won’t.

Now go out an enjoy your May.

1 comment:

Guambat Stew said...

Bernanke the Yetti