by Calculated Risk on 10/10/2005 02:37:00 AM

Dr. Tim Duy brings us another FedWatch: Clearly Hawkish Signals. On inflation and shipping:

"... Greenspan can’t be happy with what he is hearing, especially with FedEx announcing a 5.5% increase in shipping rates (WSJ subscription), the highest increase in at least nine years. FedEx is clearly confident enough about the outlook to pass on rising fuel costs to consumers. And it’s not just FedEx that’s raising prices – the Wall Street Journal reported that railroad customers are expecting a 5.6% rate hike in the next six months. It is also widely expected that UPS will join the party as well. These are the kinds of price increases that feed their way into virtually every business in the country. The Fed will worry that other firms in other industries will decide that they too should pass on higher costs to customers. Worry enough that they will want to nip it in the bud."

Dr. Polley previews some candidates for the Nobel Prize in Economics (to be announced today).

"International economics should be due for a prize in the next couple years. Jagdish Bhagwati would be at the top of many lists in that field. Perhaps this will be his year."

And from the AP: Nobel Economics Prize Winners to Be Named

Paul Romer of Stanford University, who won the 2002 Horst Claus Recktenwald Prize in Economics, has been mentioned for his efforts in developing the New Growth Theory, which has provided new foundations for businesses and governments trying to create wealth.

The theory was developed in the 1980s as a response to criticism of the neo-classical growth model.

Another name has been that of Thomas J. Sargent of New York University, a leader of the rational expectations theory, which is used to determine future events by economic acts.

Also among those being touted for this year's prize is Jagdish Bhagwati, a noted proponent of free trade and critic of opponents of globalization. The Indian-born Columbia economics professor was an external adviser to the World Trade Organization and served as a special policy adviser on globalization to the United Nations.

And Dr. Hamilton's excerpts from an essay on the macroeconomic effects of oil shocks: Macro effects of oil shocks-- what should we be looking for next?

The key question now is ... how the Katrina-induced unemployment will interact with the other macroeconomic disruptions that are also incipient in the other September data discussed above. We'll have a much better view of this in another month. The key indicators ... are further declines in consumer sentiment and spending, the timing and magnitude of the layoffs in auto- and airline- related industries, whether investment or export spending can take the place of reduced consumption, and whether house prices and construction join in with the other negatives.

Will they or won't they? Stay tuned-- we'll find out soon enough.