This Week in the Economy

Interest rates ticked up a bit this week on signs of a strong economy. We had some big economic news this week, including the monthly unemployment report, the Chicago PMI (a manufacturing index), and the GDP Chain Deflector (a good index of inflation). Job growth is now back at the rate we saw prior to Hurricanes Katrina and Rita, and the manufacturing sector is strong with inflation in check. A healthy economy is great in the long run, and mortgage bonds will produce lower returns in a healthy economy, which in turn creates a rising interest rate environment.

Also of interest, this week reports were released on personal income and spending. Fortunately, personal income is rising faster than personal spending. The result: We are now, as a society, saving NEGATIVE .7% of our income (a month ago it was negative .8)! That's right, we are still spending more than we earn! Now is a good time to review your emergency fund to determine if you still have enough of a cash cushion on hand, and make sure you are contributing enough to your retirement savings to meet your goals.