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Saturday, March 17, 2007

US recession on the road

There is no doubt that we enter the recession, hard to believe, but certainly its not the first time for the US economy the last decade, November 2001, making it not a surprise.

The Fed will certainly play a significant role, triggering the interest rates upwards, if needed, bringing them in smoke again after the last summer's super-record. Oil and gas prices are actually with oil prices once again topping $60 a barrel.

Some oil analysts at Barclays Bank are forecasting worries of $65 in the near future due to the increased petroleum demand compared to the last years' pressing OPEC's efforts to stabilize the prices.
The CPI showed nationwide fruit and vegetable prices increased 4.7% in February. This is partly because of the government's push to develop the ethanol-fuel market. This has raised the price of corn, which trickles down to everything from livestock feed to candy bars. Also, a deep freeze in California led to lower crop yields. However, following the government's new strategy on the energy, and in order to satisfy ethanol goals, food prices will keep rising modestly for the foreseeable future, causing inflationary worries.
Finally the consumers confidence is not the best due to the housing slump, high gasoline prices and the volatile stock market.


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