11/03/2008

Hello:

The recent rally in the stock markets breathes hope back into investments. Just wish the economy were stronger.
The U.S. economy contracted last quarter as gross domestic product fell to a seasonally adjusted 0.3% annual rate. The number was the weakest seen since a 1.4% decline in the third quarter of 2001.

Despite the drop, inflation continued to surge in the third quarter. The price index for personal consumption expenditures rose by 5.4%, after increasing 4.3% in the second quarter.

In October, U.S. consumer confidence fell to the lowest level on record as stocks declined and banks tightened credit. The drop is an indication that consumer spending may fall. The Conference Board's confidence index fell to 38, its lowest reading since monthly records began in 1967. In line with falling equity prices and confidence, consumers lowered spending in September and increased savings.

And today, the ISM numbers (an index of national factory activity) were the lowest in 26 years. Looks like we need a little more growth to get this party started.

Low prices and little rallies tell us it may be ok to start nibbling at the stock market in a cautiously optimistic manner.

Terri G. Millson, CIMA, CIMC President

Ray Dicius, CSA, GEPC LPL Branch Manager