US SERVICE SECTOR, LONG A COUNTERWEIGHT TO THE FADING MANUFACTURING SECTOR, FALLS FOR FIRST TIME IN NEARLY FIVE YEARS.

Art Rocker Jim Carroll, in the song “Nothing is True”, sang, “Things just go from bad to worse, It starts with a kiss and ends with a curse.”

Carroll’s observation was accurate in 1980 when the song was released, and well describes the economic prospects for 2008. Below is quote from a story on Yahoo, “US Service Sector Contracts in January”:

The Institute for Supply Management reported that its index of service sector business activity declined to 44.6 in January from a revised reading of 54.4 in December. Economists surveyed by Thomson Financial/IFR had expected a slight slowdown but had still expected growth, with a median estimate for the index of 53.

It was the first time the service sector reading has contracted since March 2003. A reading above 50 indicates expansion, while below 50 indicates contraction.

SERVICE SECTOR PROVIDERS CLUBBED WITH THE SAME BAT AS OTHER ECONOMIC SECTORS.

Price increases have slowed while costs are up... Survey respondents cited recession fears taking hold and high energy prices dragging down profitability.
Demand for services down, while costs increase. Although inflation is usually a monetary event, i.e. increases in the money supply without corresponding productivity gains, this downfall reeks a lot like stagflation of the 1970s when oil price increases triggered a cascade of cost-push inflation through an already weak American economy.

TODAY, JUST AS YOU WILL BE TOMMORROW, YOYOMF IN THE DESERT OF THE REAL. REMEMBER THAT AS YOU CAUCUS OR VOTE TODAY!