Presidential Administration Continues to Insist That All

¶ … presidential administration continues to insist that all of the factors are in place for an economic recovery, on the eve of a midterm election season, current trends don't seem to indicate any real or applicable relief from our recessionary status. What at first appeared to be a mild recovery may, in fact, be shaping up for the second leg of a double dip. This week's report placed unemployment, in the month of July, at 5.9%, a steady rate for the last six months. This mediocre stability, most analysts seem to believe, however, will give way this month to an even greater blow, perhaps as high as 6.5%. This news, combined with recent projections by mega-corps Disney and National Semiconductor that earnings will not meet expectations this quarter, have compounded the trauma to a stock market already reeling in the face of so much economic scandal. Rather than recovery, we seem to be well within the grips of a vicious economic cycle.

One of the best ways to observe the condition of the economy is by monitoring the risk of inflation as is evident by various economic indicators. A useful way to keep a watch on the value of the dollar is by way of the consumer confidence index, which denotes the sentiment of consumers toward their economy. As employment is in a relative downshift, it is not surprising that confidence has dipped 3.9 from one month ago to 106.4, and is down 9.9 from one year ago. This is a moderate decline that could get worse, but for more revealing support, the producer price index and the consumer price index are extremely useful directions in which to look. At the end of May, the PPI was at -.4 but predicted to be trending upward. And because upward or downward shifts in production expenses are usually passed on to the consumer, the PPI is usually a reliable determinant for the CPI, which is essentially a rate for the cost-of-living. This rate, as of the end of May, is at zero. Both of these rates imply stability. While the value of the dollar is not moving upward, inflationary risk is not urgent.