Diane Swonk


Last quote by Diane Swonk

I think it'll confirm that we're still at 3.5 percent [Q2 GDP], 3.5 puts a little above 2 percent for the first half.feedback
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NEW May 24 2017
We can learn a lot about a person if we know what types of things he or she talks about or comments on the most frequently. There are numerous topics with which Diane Swonk is associated, including Fed and July. Most recently, Diane Swonk has been quoted saying: “I think there's still two rate hikes. What they want to do is set up a trajectory so there's a path to rate hikes and unwind the balance sheet in a measured and slow way before Chair Yellen leaves office.” in the article Fed signals interest rate hike coming soon, but doubts remain on how much rates can rise.
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Diane Swonk quotes

Without border adjustment, you're $2.3 trillion in the hole and that means you have to move to a higher corporate tax rate.feedback

This reflects a combination of lousy weather during the month ... and the ongoing move of consumers from shopping in stores to online. Major retailers, including JCPenney, Macy's, and Sears, have already announced a flurry of store closing and shift to online operations for this spring.feedback

Manufacturing is healing. It should be healing. It's a shadow of what it was. The manufacturing sector, after being bludgeoned last year, is coming back. That's good, but it's not booming.feedback

Going from positive to negative alone is huge. You don't even need big gains. It just stopped being a drag. The steel industry is starting to come back. Mining has bottomed as well.feedback

Clearly, it's just not one or the other, not just bricks or clicks.feedback

Retail is one of the largest employers in the country, and it's going to go through a pretty massive secular restructuring. We shop differently now, and no one has the right model.feedback

It went from being implicit to explicit. They wanted to show the Fed could reflate the economy.feedback

It should be a wakeup call. They have to meet the core, but the reality is we're moving in the right direction, and the core is within spitting distance. They have to take into account that monetary policy works with a lag. You're going to get a hot inflation number and weak consumption number. When it's 70 degrees in Chicago in February, we don't consume any heat.feedback

CPI, I think, is going to come in pretty good and it will feel pretty warm. My guess is you're going to see a higher level of certainty on this multiple rate hike scenario. We're finally at a place where the economy has some self-feeding momentum. It's not just the Fed propping up the us up again. They need to illustrate that.feedback

I think the risk of four rate hikes went up dramatically. It's been the quantity of jobs, outpacing the quality of jobs. We're now seeing some jobs come about in manufacturing and construction. It looks like GDP has some issues with seasonality in the first quarter. That has been an ongoing issue. It's the volume of jobs versus over overall job growth. Now we're finally seeing some good jobs come back in manufacturing and construction ... we're finally getting wage acceleration and that's what the Fed wants to see.feedback

It's going to be hard for this report to be a negative in terms of rate hikes. What's important to remember is the threshold is very low for the Fed. That is something we have to get used to.feedback

That's really going to open the door for China to have a lot more power within Asia and power in Latin America, and in North America, even talking to Mexico directly now. That's going to change the equation for China and the balance of power on trade relative to the U.S. if we really pursue these bilateral agreements. It may actually be to China's benefit and our loss.feedback

We actually think by the end of the year, they'll be up 3.6 percent (year-over-year). You can easily get to 3 percent mathematically by slowly growing wages at their slowest pace last year.feedback

Financial services was a driving factor of employment gains, and here's one of the areas where employment gains came in, and we lost 34 cents an hour. That's stunning. Bonuses were down for a third year in a row. Those bonuses were tied to incentive pay as well.feedback

The bottom line is that January is a fluke in our comparisons. Our numbers suggest we can snap back over the next several months. By mid-year, you'll have more normal wage gains again.feedback

With the exception of the wage data in January, the data is there [for a hike]. The question is what are the perimeters on the uncertainty? You have a lot of things that could roil financial markets in a major way and a lot of uncertainty. The data is saying we should [hike rates], but there's an argument for a potential pause.feedback

The core numbers were still good. The consumer is resilient and coming through. In the inflation data, almost half of it was the sharp increase in prices at the pump. Does it mean a March rate hike for sure? No, but it's an open door. It's a warmer economy and it was a warmer January. We're around 2 percent growth in the first quarter which is what we expected. It's good fundamentally.feedback

The Fed has been pretty consistent that it wants the rate hikes to come at a gradual pace, but that could change if Fed officials believe the budget-and-tax package that Trump is pushing is too big and coming too late in the economic cycle, with the economy already at full employment. She is going to want to fly under the radar as much as possible this week.feedback

We had 19 states raise their minimum wage in January, including some big states like California.feedback

Even small rate changes from these low levels are very destabilizing on financial markets abroad as well as at home. They want to go gradual and be orderly, not disorderly. They can only react. There is so much uncertainty. We don't know what's going to happen next, and because of that the Fed has to be in reaction mode and not getting too far ahead of itself on rate hikes.feedback

The move from bricks to clicks is causing major disruption in the retail industry.feedback

It's all to do with the fact it's a global industry. This is part of the supply chain. It's U.S. producers that produce in the U.S. It's foreign producers that produce in the U.S. It's all part of a chain.feedback

We know that driving miles are up. Prices at the pump went down, but gasoline sales went up.feedback

The retail sales number is not really capturing the move to online. Where you do see strength is food and restaurants surged.feedback

It wasn't a slam dunk number by any means. The wages (number) is the most important, but it's important to know it came off a surge last month. It's a hiccup in wages, but not enough to stop the Fed.feedback

You've got to take it in context. Last month was an extraordinary jump. I'm not happy with it … but at the end of the day the wage number was really strong in October, so you take a moving average and that's what the Fed will do.feedback

I've been hearing mixed stuff about October but retailers sound pretty optimistic about the holiday season, so they must have started off November pretty well.feedback

It will look like a good month because of the autos. The question is what does the core look like.feedback

Consumer confidence surveys show the current situation is fine. Employment is fine. It's the expectations that have deteriorated, which you could expect to see, given how ugly this election has gotten.feedback

I'm looking for 190,000, a little warmer. Retailers are hiring a little earlier than they were. They have pulled ahead hiring to try to compete. It's a sign of a tighter labor market.feedback

She wants to hedge against another recession.feedback

The last statement was nuanced. It would be nice if this was not nuanced and they say they're ready to go. You get a sense that the debate that's rising in the Fed is about more than a December rate hike. It's about going forward.feedback

If they do put it in, I think it would reduce the number of dissents. I don't think Janet Yellen minds having a pretty big showdown, even with her own vice chairman.feedback

We have an election that's highly contentious. I don't think it's the same situation it was a year ago.feedback

Communications are a wreck. Data dependence was wonderful to convey the Fed wouldn't raise rates for a very long time.feedback

It has been coming down consistently. The Fed has consistently been lowering the terminal rate and lowering its trajectory. The markets have been more accurate than the Fed which we know, but that doesn't mean they will continue to be that way.feedback

I think they add more confusion than clarity because there's such a dispersion. It's not clear how much it represents a consensus of what the Fed expects.feedback

They will want to prepare markets so that when do they move, it will be an almost non-event.feedback

I think the Fed will give us a statement that opens the door wide for a December rate increase.feedback

Inflation data is warmer than expected, and it will give fodder to those (Fed officials) who already coalesced around a rate hike. But we're going to see a hawkish hold.feedback

It doesn't matter if it's September or December. It's where we were a year ago, the Fed wants to get a rate hike in this year. Once-a-year-Yellen.feedback

To keep the dissenters at bay, you need to have a statement that's a little more hawkish. This isn't quite the punt it was a year ago in September when there was chaos in the market and China was on the edge. This time we're getting very, very close. I think (noted dove Fed Gov. Lael) Brainard will get to say let's wait. I think the mixed economic data gives them enough reason to pause.feedback

There is a real issue on cause and effect and a vicious cycle of if you pull out, do you have the tail wagging the dog on financial markets telling the Fed what to do. On the other side of it, we can't afford to have a sort of very disorderly unwinding of financial markets either.feedback

It does make me worried about can we really get the fiscal reforms and fiscal policy we need to get better economic growth and get the Fed sidelined. I'm not sure that can happen.feedback

Austerity sort of took a higher priority than it should have earlier in the cycle.feedback

What Rosengren said is nothing new. Rosengren wanted a September rate hike.feedback

Core retail sales should still be good outside of autos.feedback

We've heard from Dan Tarullo in the inner circle and he's consistent with the view to be more dovish. He's not opposed to a rate hike this year but he would be for December. (The markets) allowed Rosengren to trump Tarullo, and Brainard has an even greater sway in Yellen's inner circle.feedback

Retail sales will certainly be important for the Fed. We get industrial production too which is likely to be lousy.feedback

It's horrible and the costs are going up. It's really hard on margins. This doesn't suggest there's a lot of pricing pressures either.feedback

It's nasty. It really is a tale of two economies still. That's the issue. The consumer is doing fine. It's not going to determine what the Fed does. It's a signal that we've already seen ... that the manufacturing sector continues to struggle.feedback

Investors are not pricing in a Fed tightening. We still have uncertainty coming from abroad, and there are a lot of land mines out there. I think Yellen will want to keep her options open in her Jackson Hole speech.feedback

The Fed has failed to come to a consensus on communications. The blow to credibility is leaving markets pricing a form of infinite easing.feedback

It's the Fed's conundrum. ... The markets are pricing in easing infinity. If they raise rates, they could destabilize the markets. If they don't raise rates, they're feeding a bubble. It's a hard place to be in.feedback

I think she's going to play her cards very close to the vest. I don't think she can signal a September hike.feedback

We're tired of talking about rate hikes when it's not going to happen for a while.feedback

By September, we may have more easing from abroad. My sense is the board is more sensitive to that and it's not about election risk. It's about policy risk. I think December or January is more likely. Is there a chance for September? If you're data dependent, yes ... I don't think they're going to do it but you could have people chattering out there. We've seen a lot of squawking around the Jackson Hole meeting when they're at a pivotal point.feedback

They added that near-term risks to the economic outlook have diminished. That was a throw in there for the people who are looking at the buoyancy of the financial markets and saying they could raise rates. My take on that was to keep the dissents to one. Even though they upgraded their outlook on employment and consumer spending, they left inflation unchanged. That is despite the fact that it is rising.feedback

We've got synchronous unconventional policy and that gets you in a vicious cycle, as well. The issue is how far can we go? Negative rates for the U.S. are a big problem. ... The Fed's trying to cushion the economy. That said, if things go south, they have a problem.feedback

He's one of the more prominent in an industry where you would not expect it.feedback

The Fed is handcuffed at the moment. You have got a lot of things moving in the wrong direction in the view of the Fed because of the vote in Britain.feedback

It's a fine line to walk about not making it too big of a point. You want to discount it a bit, but if you make too big of a point then you talk up the market jitters.feedback

The Fed's dealing with the same stuff. It's just the Fed has painted themselves into a corner with data dependency because one piece of outlier [jobs] data does not make a trend.feedback

The push to inhibit trade, close borders, and [increase] regulation across a broad swath of industries are all a threat to growth in 2017. The only policy offset is the realization by both sides of the aisle that corporate tax reform could bring money home and increase our competitive advantage.feedback

If we get a decline in June jobs, and the U.K. opts to stay in the EU, then we have a shot at a July hike. She's clearly leaving all options open. Cautious optimism was the dominant theme of her talk, and saying not to make too much about the May employment report.feedback

It's the Fed speak we've got to watch, although I think we'll see more dissidents than a symphony. It's a big week for data. I'm not sure it will clarify, it will probably just confuse given the range of speakers we get from the Fed.feedback

There are fewer but better-quality jobs. They're dominated by business and professionals. It's new college grads. It's part of the reason why year over year, we had an acceleration in wages. They are full time, science, engineering and accounting.feedback

They're walking this very fine line which means they can't provide the certainty that markets want, but it's really not helpful either. It's a very dysfunctional Fed confusing the market.feedback

The problem is you've got disagreement. The gap has widened. You've got dissents. When you have dissents, you have volatility.feedback

Divergent monetary policy matters because you can derail stuff inadvertently, and that's what the Fed doesn't want to do either. What happens abroad comes back on our shores. The Fed has to walk such a careful line of saying they're doing monetary policy for the U.S. but they can't ignore international conditions.feedback

I don't think they can put the balance of risk back in, because they can't agree what the balance of risks are. It just means continued uncertainty, continued uncertainty for the market.feedback

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