Joshua Shapiro Prices Quotations

We believe that consumer spending is going to bear the brunt of higher energy prices that we have seen leading up to and immediately following Hurricane Katrina as discretionary spending is curtailed.

While these orders have been volatile of late, the trend remains a solid one. Whether we will see a disruption in this trend due to the surge in energy prices remains to be seen and will ultimately be more important to markets than today's pre-Katrina outcome.

There's not much to worry about as far as imported inflation is concerned. For as long as the dollar hangs in there, we should see a benign reading for import prices excluding fuels.

The big question now is how much companies will be able to raise prices for finished products to offset the hit to profits from higher unit labor costs.

It's a wait and see. If we get another powerful storm that does damage to refining capacity in particular, I think all bets can be off if gasoline prices will go higher and stay there.

An aggressive effort by business to pass through higher energy prices will probably largely fail as an increasingly strapped consumer proves resistant.