Schultz Financial Mgmt Corp

Risk-Controlled Portfolios for Serious Investors

Economic Outlook

(Updated through 3-31-06)

Leading Indicators and Economic Growth 

"Based upon the U.S. Weekly Leading Index which has eased in the last 2 months, US economic growth is likely to continue at a moderate pace.  

(R. Schultz, 3/31/06)

   Annualized Weekly Leading Index Growth Rate of 2.3%

Chart Source:  Economic Cycle Research Institute

Weekly Leading Index Slips      

NEW YORK, March 31 (Reuters) - Higher stock prices, stronger housing activity and lower jobless claims caused a gauge of future U.S. economic growth to edge up in the latest week, a report said on Friday.

The Economic Cycle Research Institute, an independent forecasting group, said its weekly leading index edged up to 137.0 in the week ended March 24 from a downwardly revised 136.2 in the prior week. The prior week's level was originally pegged at 136.5.

The index's annualized growth rate was flat at 2.3 percent in the latest week. The prior week's growth rate was downwardly revised to 2.3 percent from 2.6 percent.

"Although the weekly leading index growth has been easing since early February, U.S. economic growth prospects remain reasonably positive," said Lakshman Achuthan, managing director at ECRI.

Inflation and Interest Rates:

"U.S. inflationary pressures continue to remain high as the economy remains strong, suggesting that long term treasury bond yields will continue to trend higher over the next few months."  3/31/06  R. Schultz

U.S. Future Inflation Gauge Rises

NEW YORK, March 10 (Reuters) - Overall U.S. inflation pressures fell in February due to measures of vendor performance and jobs mostly, a report said.

These moves were offset by inflationary moves in measures of joblessness, commodity prices and interest rates.

The Economic Cycle Research Institute's U.S. Future Inflation Gauge, or USFIG, which is designed to anticipate cyclical swings in the rate of inflation, edged down to 123.1 in February from an an upwardly revised 123.5 month.

"The USFIG remains below October's five-and-a-half-year high," the report said.

The index's annualized growth rate, which smoothes out monthly fluctuations, fell to 3.5 percent from an upwardly revised 4.6 percent in December. The growth rate was originally pegged at 3.9.

"Despite a modest dip, the USFIG is not far below October's five-and-a-half-year high. Thus, it is still premature to conclude that a cyclical downswing in underlying inflation pressures is already underway," according to Lakshman Achuthan, managing director for ECRI.