George's Economy

This is what happens when you trust a Texas Oil Man with your economy:

The economy received another inflation warning on Wednesday, when a survey of industry executives showed that energy costs drove prices higher in September while business activity slowed in the services sector. The report reinforced expectations that the Federal Reserve would continue to raise rates as the economy struggles with rising fuel costs aggravated by Hurricane Katrina.

The Institute of Supply Management, which conducted the survey, said its non-manufacturing business activity index was at 53.3 percent in September, down from August's reading of 65 percent. The group's index of prices paid rose 14.3 points to 81.4 percent, the highest level and the biggest jump for the index in the eight-year history of the report.

The survey, whose results chipped away at broader Wall Street stock indexes on Wednesday, found that many business executives are concerned about the continuing rise in oil and gas prices after Hurricane Katrina and about the toll rising energy costs will take on the economy.

"That is the $64,000 question: if and when manufacturers and businesses decide they have to pass through these rising prices to consumers?" said Jerry Zukowski, deputy chief economist at Nomura Securities International Inc. "A lot of it is energy. We are clearly not out of the woods in terms of these price pressures."

[snip]

Wednesday's report on the services sector of the U.S. economy follows a survey of manufacturers published on Monday by the ISM. That survey also recorded a dramatic rise in its prices paid component.

"It is troubling to see so many more purchasing managers, manufacturing and non-manufacturing, paying higher prices to their vendors," said Johnson. "It suggests that the Federal Reserve is faced with an economy which is weaker and inflation which is stronger. That is not a particularly good configuration."

Before anyone starts howling at me that Bush had no control over the hurricane and its impact on the economy, think about the rising price of gas in the U.S. and then look at the profit margins for George's friends in the oil industry.