The real depreciation will squeeze their profitability, ceteris paribus, just as it strengthens the profitability of the traded goods sectors. From the standpoint of the long term interests of the economy, shifting relative price incentives from the non-traded goods sectors to the traded goods sectors is necessary if we are to achieve lower trade deficits.
The Committee was getting mixed signals from the labor market data in August and September. Two consecutive weak job reports didn’t square with a rapidly falling unemployment rate. Later that fall, and then with the Labor Department’s 2021 revisions, we found that payrolls were quite steady over the course of the year.