“The fundamental challenge that we have in the economy is the housing sector,” says Hubbard. “And we’re focused on that in Washington. The good news is the rest of the economy is very, very strong. The GDP numbers came out at 3.9% and exports are up 16% year over year. So, what we call the real economy is doing just fine.”
He adds, “But we have challenges in the financial sector and housing sector and we’re very much aware of that.”
Will housing weakness permeate the rest of the economy?
“So far it’s not permeating the rest of the economy,” says Hubbard. “And that’s because unemployment remains very low at 4.7%. And we continue to produce new jobs at a very rapid clip… and wages and compensation are growing quite strongly… You put that together and that’s why the consumer continues to be strong and that’s why the rest of the economy continues to be strong.”
Can you talk with us about the dollar?
“No,” says Hubbard. (he laughs)
How about future write-downs in the financials?
“The good news is that the banks are all committed to transparency and if their assets are over-valued than they’re revaluing them,” says Hubbard. “And that’s what we’ve seen in the past few weeks as Merrill Lynch and Citigroup and Morgan Stanley and others have marked down parts of their portfolios.”
He adds, “And the good news is… we do have openness and we do have transparency. So people know what’s going on.”
What’s most important economic data, to you?
“The most important number is the unemployment rate and job creation which remains strong,” says Hubbard. “Secondly, the growth in wages and compensation which remains strong. We think the economy will continue to expand. That’s not to say we don’t have challenges.