Consumers are trimming spending as gasoline prices remain near $4 a gallon, home values fall, credit becomes more difficult to obtain and the job market weakens
Fred Day
Aug. 3, 2008

The US economy is weakening very fast. The reports this week will show, service industries in the U.S. shrank in July for a second straight month, signaling the slowdown in growth broadened and accelerated.

The PCE Deflator however points to increasing commodity inflation. That is worrisome for the Fed. It does not have the tools to fight the exploding stagflation. The reports this week will also show home sales declined and consumer spending slowed, indicating the real-estate recession and soaring fuel costs are rippling through the economy. Concern over the outlook for both growth and inflation will prompt Federal Reserve policy makers to keep interest rates unchanged at the conclusion of their meeting on Aug. 5. Consumers are trimming spending as gasoline prices remain near $4 a gallon, home values fall, credit becomes more difficult to obtain and the job market weakens.

The unemployment claims have reached the true recession levels and the unemployment is inching higher slowly but steadily in a parabolic pattern signifying a very long term trend is in place.

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