FROSTY FUTURES

July 11, 2006

From 1996 thru 2001 a new term was coined to describe the business
cycle, The New Economy. This evolution reflected the phenomenon
of lower unemployment, increased growth rate and higher productivity
without increasing the rate of inflation. Many of the readings on
the economy were projections and estimations that were "tendline"
in nature. For example, demands from labor were kept in line because
of outsourcing and this contributed to a reduction in pressure from
that area. And that brings me to the point of this note. There is now
taking place a reversal in the flow of outsourcing. The two major
reasons given for this reversal are poor performance and a lack of
real cost savings. This may and should have an effect on domestic
labor as demand for workers increase, wages will increase and
the danger of an increase in the rate of inflation will increase. I
want to add, this is a MACROECONOMIC phenomenon, not
something that will take place overnight. But the pressure is there,
and the reaction is sure.

CONTACT ME: williamfrost@comcast.net or call 931 853 5008.

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