Bottom Line: An improvement in labor markets would not be unexpected given the GDP surge at the end of 2009. But sustainability is the key, and sustainability requires 4Q09 GDP numbers in the absences of inventory effects. Few forecasts are looking for such growth, certainly not yet at the Fed. ... I don't see an actual return to recession short of another negative demand shock, but I am expecting the economy to settle into an anemic pace of growth. In this environment, I don't see how the Fed is interested in substantially tightening policy...

Tim Duy, reviewing the case for the inflation hawks. I'm still reviewing the employment report and may not post on it until this afternoon as I try to the rebenchmarking, but the quick peek indicates concerns about the birth/death model were justified. I'll try to explain in the next post.

Labels: economics