Economy Cooling Too Quickly

The AP reports "Stocks retreated Thursday after the Philadelphia Federal Reserve surprised Wall Street by announcing that its broadest measure of manufacturing activity fell to a negative reading for the first time since April 2003, renewing investor fears that the economy could be cooling too quickly," and

"Investors are concerned the Federal Reserve has perhaps slowed the economy too quickly as it sought to contain inflation. The Fed raised interest rates 17 straight times over two years before leaving them unchanged for the second straight time Wednesday."

Surely readers remember my calls for the Fed to first pause rate hikes and then to actually cut the rate, and I don't relish this news. But why the hell didn't they pause the rate sooner and let the increases take effect? I stand by my prediction that we will see a rate cut by the beginning of 2007.