Inflation VS. Deflation and Jobs, Where is the economy heading?

Inflation, Deflation, Jobs, and the Consumer. Where is the economy heading? Thursday’s jobless claims rose 19,000 to 479,000 week ending July 31st and people filing for continuing claims dipped slightly to 4.537 Million vs. last weeks 4.571 Million. All eyes will be on tomorrow’s unemployment report which will likely be a determining factor in the direction of the market. Friday’s anemic July’s Jobs Report was down 131,000 jobs and the unemployment rate stays unchanged at 9.5%. This was a worse than expected number. The good news is that the private sector did add 71,000 jobs but, it was far worse than expected. The DOW Futures point to a negative open. It seems to me that a permante tax cut needs to be addressed!

The Bank of England leaves rates unchanged at .5%. This was good news and shows they are on the same page as the Federal Reserve and monitoring the financial situation closely. The $64,000 question is who will win the fight of Inflation VS. Deflation? Both are a pretty bad situation to be hoping for. Higher inflation means higher prices on goods and services but deflation means prices on goods and services are going down which typically may suggest a recession. When prices don’t go up that means companies aren’t generating higher profits which is bad for the stock market.

Another key question is if the consumer is slowing down? The health of the consumer is on everyones mind. Companies like Proctor & Gamble, Dean Foods, and Clorox all guided lower earnings going forward. The consumer and spending is what we need to stay ahead of the curve in order not to fall back into a recession.

30 Year Fixed Rate Average hit another record low at 4.60% and the 15 Year Fixed Rate Average is at 4.03%

Oil is at $82.21 a barrel and gold is at $1,197 an ounce. The DOW was up 209 point through Thursday so far this week and the jobs number tomorrow will sure be a guide to what happens.