Economy doing unexpectedly good.

The American Economy shows unexpected strenght despite the housing and credit market woes. Altought the inflation is staying tame wich make's it uncertain for the FED what to do. The big question is Should the FED cut rates?
The unexpected strength is a sign that the FED shoudn't cut rates, but the tame inflation is a good sign to cut the rates without any fears. The decicion will be announced when the FED concludes its 2 day meeting.
The gross domestic product rose with 3.9% wich is higher then the 3.1% they expected and the 3.8% from last quarter. This is the strongest pase of economic growth since the first quarter of 2006. Export grew 16%, consumption by 3% and prices only rose by 0.8% wich is a big difference from the 2.6% rise last quarter. The readings on both economic growth and price pressures were being closely watched for clues as to what the Fed might do with interest rates. Most economists are forecasting the central bank will trim rates by a quarter-percentage point.

This is good news. After alot of negative reports it finally seems that the american economy is not as weak as it seemed. Now we have to stay sceptic, this is a report by the governement. So we have to wonder if the economy really is recovering or that maybe these numbers are just a way of trying to silence the doubt in the governement. But since we do not have any other information we have no choice but to believe them.
Now I personally think that the FED should cut the rates. Because this could prevent some future problems and its an ideal time to do it because of the tame inflation.

Nico Cottry

Source: http://money.cnn.com/2007/10/31/news/economy/gdp/index.htm?section=money_topstories

Btw: I wrote a blog this week because I forgot to make one last week.