Download Weekly Economic Report December 4, 2006

Conference Call 12/4/06
US Economy Last Week
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Commerce Dept revised 3rd Quarter GDP to a 2.2%
increase instead of 1.6% rise initially (GDP was up
2.6% for the 2nd Q 2006)
Real Consumer Spending rose 0.4% in October
Prices for personal consumption expenditures (PCE)
rose 0.2% in October and are up 2.4% on a year
over year basis
The core PCE is still too high when it is compared to
an announced long-term Fed target of 1-2% on an
annual basis
US Economy Last Week
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2 Important Reports pointed to a weaker economy in
the coming quarters
Durable Goods fell 8.3% in October, due to a 44.5%
decline in civilian aircraft orders
New orders for non-defence goods excluding aircraft
fell 5.1% in October and are up only 4.5% in the past
12 months
Institute for Supply Management reported its
manufacturing index fell 49.5% in November from
51.2% in October (Lowest Level since April 2003)
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Economists comment that a reading below 50 on this index
means that the manufacturing sector is contracting
Markets last week
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Stock market prices declined this week and the
NASDAQ composite fell 1.91% for the week
Bond prices rose for the week as the yield on the 10
year Treasury note fell from 4.55% beginning of the
week to 4.42% at the end of the week
US dollar continued its sharp slide against the yen
and the Euro raising concerns about inflation and
possibly delaying any cut in short-term interest rates
by the Fed
Markets last week
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The 12 month rate of growth in consumer prices has
declined sharply in the past 3 months and stock
prices often rise during these periods
QInsight is concerned that the decline in the growth
rate has been primarily due to falling energy prices
and stock investors have to ask themselves how
much more global energy prices can fall
QInsight’s model remains in the easeoff phase, but
the US economy may be close to a transition to the
plunge