The Economy is Good for Everyone

Interesting stuff on the economy - after reading this, ask your self why so many people thing the economy is doing poorly?

The stock market is over 12,000, and that helps our 401's and 403b's as well as providing 6.1 million new jobs in the last three years.

Tax revenues are up 24% from last year and the federal deficit has been cut in half - four years ahead of projections.

There is much more good news here but all you have to do is open your eyes and look arouund, the 'help wanted' signs are everywhere. The economy is on the move - believe it.

Consumer Prices Fall

Core Inflation Up Consumer prices, helped by big declines in gasoline and other energy products, fell in September by the largest amount in 10 months. The Labor Department reported that the Consumer Price Index dipped by 0.5 percent last month, which was better than the 0.3 percent decline that Wall Street had been expecting. It was the biggest decline since a 0.7 percent fall in November of last year and reflected a sizable 7.2 percent drop in energy prices.

In a further indication that price pressures are moderating, core inflation, which excludes energy and food, edged up by 0.2 percent, the third straight month of modest gains following higher readings earlier in the year. In other economic news, construction of new homes and apartments posted an unexpected gain of 5.9 percent in September to a seasonally adjusted annual rate of 1.772 million units.

Housing construction had fallen for three consecutive months, reflecting the significant cooling of the once-hot housing market. The bigger-than-expected decline in consumer prices should help reassure investors that a slowing economy is helping to reduce inflation pressures according to the script written by the Federal Reserve.

The Fed until August had raised interest rates 17 consecutive times over two years in an effort to slow economic growth enough to combat rising inflation. But it left rates on hold at the August and September meetings and analysts believe they will also remain on hold at next week's meeting. The 0.5 percent decline in consumer prices last month followed a 0.2 percent August increase with the improvement coming primarily from the big drop in energy costs.

Gasoline prices fell by 13.5 percent last month, the biggest one-month decline since a drop of 16.1 percent last November, a period when prices were retreating after having spiked sharply with the shutdown of Gulf Coast refineries following Hurricane Katrina.

In a hopeful sign for the upcoming winter heating season, home fuel oil prices fell by 6.1 percent, although natural gas and electricity prices were up for the month. Food prices rose by 0.4 percent last month with vegetable prices jumping 6.6 percent, the biggest increase since April 2005.

The government also announced Wednesday that the nation's nearly 49 million recipients of Social Security benefits will receive a 3.3 percent increase in their checks as a cost-of-living adjustment starting in January. So far this year, consumer prices are rising at an annual rate of 3.4 percent, matching the increase for all of 2005.

Excluding food and energy, core inflation has been rising at an annual rate of 3 percent, still above the Fed's comfort zone of 1 percent to 2 percent.

However, economists believe with price pressures now moderating, the Fed will be content to keep rates unchanged probably for the rest of this year. © 2006 Associated Press.