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Friday, September 07, 2007

Sept 7th Jobs Report & ECRI's WLI & FIG

The poor jobs report, WLI at a 43-week low and ECRI's FIG at a 27-month low should make it a "no-brainer" for the Federal Reserve to cut interest rates at its September 18th meeting, if not before then.

ECRI's WLI:

  • 7-September-2007 The Economic Cycle Research Institute, an independent forecasting group, said its Weekly Leading Index (WLI) edged up to 140.4 in the week ended Aug. 31 from 139.2 in the prior week. ECRI said the annualized growth rate in the index declined to 0.6 percent from 1.3 percent in the prior week. It marked the smallest growth level since the week ending Nov. 3, 2006.
  • "With WLI growth at a 43-week low economic growth prospects have clearly dimmed, but not yet in a recessionary way," said Lakshman Achuthan, managing director at ECRI.

USFIG - ECRI's U.S. Future Inflation Gauge:

  • 7-September-2007: U.S. inflationary pressures fell to a 27-month low in August largely owing to disinflationary trends in commodity prices, jobs, loans and interest rates. ECRI's U.S. Future Inflation Gauge (USFIG), designed to anticipate cyclical swings in the rate of inflation, fell to 116.8 in August from 119.5 in July, upwardly revised from 119.3.
  • "With the USFIG at a 27-month low, underlying inflation pressures continue to ebb," said Lakshman Achuthan, managing director at ECRI. "With respect to the inflation outlook, this gives policy makers additional leeway to lower interest rates."
  • "The (USFIG) gauge was pulled down in August mainly by disinflationary moves in measures of jobs, loans, commodity prices, vendor performance and interest rates," a statement from ECRI said.
  • The USFIG's annualized growth rate, which smooths out monthly fluctuations, dropped to minus 5.1 percent from minus 1.4 in July, revised from negative 1.7.

JOBS Report:

  • 7-September-2007: August saw the first decline in jobs since August 2003. The Labor Department said August nonfarm payrolls fell by an estimated 4,000 while the unemployment rate held steady at 4.6%. Wall Street economists on average had expected 115,000 more jobs, not a loss of 4,000. Read the full BLS report.
I'll post charts of WLI and FIG here as soon as I figure out how to upload them from my hard drive.

Kirk Lindstrom's Investment Letter Performance

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