Hi Everyone,

The growth of our economy for the third quarter was revised from an initial 3.5% to 2.8%.    This was not unexpected, as economic experts thought that it would be revised to 2.9%.  A downward revision is not unusual during slow economic times. The reason for the downward revision was mainly increased imports that were not accounted for in the first publication in late October.  We will get a final reading for the third quarter at the end of December.

The question is how will the fourth quarter perform.  All indications are that the fourth quarter will be weaker than the third quarter, as the cash for clunkers program contributed to almost half of the growth in third quarter.  This program is cancelled, and another government program, the new home buyers credit, was expended and is still contributing to the growth.

Nevertheless, in order to have sustained solid growth, the growth has to come from the private sector and not through government programs, and the signs for that are few and far in between.

There is a weather analogy to our current economic situation.   Our economic malaise is comparable to a hurricane, and currently we are in the eye of the storm.  The hurricane hit full blast late summer of 2008, and we entered the eye at one point last spring.  The question now is when will be enter the other side of the hurricane, and is that side more viscous than the other side or has the hurricane weakened a little.   Time will tell, and looking at a real hurricane, the bigger and stronger the storm, and therefore the larger the eye, the less likely it is for the storm to hold it extreme strengths.

Make sure your portfolios are ready in case the storm hits again, for any of us who have been through a hurricane and experienced the eye, know what kind of ramification that could have.

Happy Thanksgiving to all of you.

Cheers,

Patrick