SO IT'S ACTUALLY REVERSE STAGFLATION:

Creation of Jobs Surged in April, and Income Rose (LOUIS UCHITELLE, 5/07/05, NY Times)

Overriding earlier evidence that suggested the economy was slowing significantly, job creation and income growth appear to be holding up their end of the recovery.

The government reported yesterday that the nation's employers generated an unexpectedly large number of jobs in April - 274,000 - even as they gave their existing employees additional hours of work.

The employment report was the most positive news about the economy in weeks. It dented the gloom that had accumulated after a number of recent measures provided evidence that last year's robust growth might be fading.

"The main thing I think these employment numbers tell you is that all this worry about the economy experiencing a significant soft patch has been exaggerated," said Richard D. Rippe, chief economist at the Prudential Equity Group. [...]

Whatever the uncertainties, the new jobs report killed incipient speculation that the Federal Reserve's policy makers would ease up on their regular quarter-point interest rate increases, perhaps letting the June meeting pass without one. Reflecting this sentiment, yields rose yesterday for the benchmark 10-year Treasury bond, which influences mortgage and car loan rates. Stock prices finished the day almost unchanged.

The Fed will raise rates until it stalls out the economy as it did in 2000.

Posted by Orrin Judd at May 7, 2005 7:58 AM