BEHIND THE HEADLINES

The headline is about as far as most people will dig when it comes to economics and financial conditions and today's Empire Index gave them a happy headline, but behind the headline we see the trend which has been emerging for some time now and very consistently. RISING INPUT COSTS, yes, once again we see rising input costs for the materials needed to make products. Prices paid hit a new 2.5 year high while the prices received for the products was little changed, this means companies margins are as we have been predicting, shrinking. Another forecast made here at WOWS would be that there would be an effort to streamline before passing prices onto consumers and we see that in the data as well with the employees index which dropped from 8.4 to 3.6 a HUGE change and as predicted, this will lead to higher unemployment, but the New Orders component also shrank so at some point very soon after these companies have done more with less and new orders exacerbate the margin squeeze, there will have to be higher prices, lest the shareholders revolt and the CEO's lose their cushy multi0million dollar jobs.

Bottom line, higher unemployment, higher inflation-a very dangerous mix for the economy.