US Economy

It is silly to compete with all the learned economic forecasts
out there. So, I will provide but a brief sketch of what my
indicators suggest:

Cyclical growth potential is now negative at -0.2% reflecting
weakening employment and a modest contraction of the real wage.

Shorter term leading economic indicators are weakening further,
but so far signal only a shallow downturn.

Performance of my longer term indicators over the past eighteen
months are consistent with development of a recession and very
sluggish period through mid-2009.

The longer term indicators are turning decidedly positive now.

My profits indicators require more than normal elucidation.
Financial service revenues and net revenue spreads before
chargeoffs have slowed, but are decent. The chargeoffs as all
know have been huge and will be a factor through mid-2008.
The "average" non-financial is experiencing mild margin pressure
in US ops. but offshore earnings have been strong and may
just be starting to show some wear and tear.

Analysts expect SP 500 net per share to jump to 100 in
sustainable earning power by the end of 2008. That looks too
high from today's perspective ( current 12 mos. eps of 81.25).

Inflation thrust, recently dominated by commodities action,
has hit a brick wall, at least for the short run. That's a positive
for the real wage, confidence and the stock market's p/e multiple.

Based on long term history, the cut in the Fed Funds rate to
2.25% is enough to help underwrite an eventual economic
recovery (Better than 50% off the cyclical peak of 5.25%).