I was going to keep out of this, but sometimes I just can't help myself!

I think the inflation numbers we are getting now, with the smoothing factors, and seasonal adjustments are hiding a real increase in the true rate.  Just look at food, gas, medical, and housing costs.  The rates we see continue to reflect much too strongly the cost of borrowing.

Interest rates have no choice but to go up due to the effects of the tax reductions passed a couple of years ago. It was a short term idea that does not bode well for the future of our economy.  The growth of the federal deficit is forcing up the amount of federal borrowing, thus increasing the rate that must be paid by the private sector by reducing the funds available.

My understanding is that the amount of leverage on housing is at a historic high, which does not lend itself to a strong real estate market for the near future.  I fear we may be in a bubble economy regarding real estate and the next few years could be much like the late seventies.

Regarding unemployment rates, I would suggest reading the editorial by Alan Abelson in the current issue of Barrons and the following link http://www.econedlink.org/lessons/index.cfm?lesson=EM219 .  Unemployment rates are not pretty.

I'm afraid that both parties have such a short term outlook on the economy and getting elected that the long term condition of the country is being ignored.

I truly hope my pessimism is ill-founded, but I tend to be a worrywart.

Take care everyone!  Doug