Economy - Week of Oct 15-22

The interest rates imposed by the Federal Reserve which have remained at 5.25% have finally shown an effect on the economy. Consumer and producer prices ceased to increase in September as CPI was down .5% and PPI down 1.3%. In addition, 151,799 jobs were added to the workforce in September, sending unemployment to 4.6%, down from 4.7% in August. These numbers may indicate that at the next Fed meeting the board will either hold rates for the third straight meeting or lower rates in order to help give the economy a small boost to maintain the growth that we have been seeing. Should the Fed lower rates the market will most likely continue its climb upwards due to the fact that it will be cheaper for investors to borrow. In addition, bond prices would also go up since bond prices move inversely to the fed funds rate. As for energy costs, oil prices continue to remain stable at around $59 a barrel, despite the announcement by OPEC of their plan to cut production by 1.2 million barrels a day, or 4%. These low energy costs should help growth during the fourth quarter, especially during the holiday season where consumers will have more of their income to spend on goods.