Economics Report

Productivity was up only 1.6% in the fourth quarter, down from the 3% increase we had in the last quarter. In addition, factory orders drooped 5.6% in January and signed contracts to purchsae homes fell 4.1%. This is a good indication that the economy all together is starting to slow along with the housing market. However, rates are not likely to decrease any time soon. The costs of labor rose by 6.6%, much more than the .2% increase in CPI that we had in January. Unfortunately, this adds inflationary pressure during a time of economic slow down and as Bernanke has stated, he will deal inflation if he has too.

As we all know, Greenspan came out last week and talked about the possibility of the United States seeing a recession in 2007. Recently, he said that there is a 1/3 chance that this could happen and that we won't be able to maintain the expansion we are seeing now.