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September 11, 2012 – 5:11 pm

Consumer credit fell sharply in July as reported yesterday when expectations were for a significant rise. In the long run this is good news as deleveraging by the consumer continues in many areas except in the college loan area which can be argued is also good news, educating our youth.

This reduction in consumer credit however, will slow our economic recovery since our economy is 70% consumer driven. This added to the dismal jobs report last Friday for August may just give the Fed enough reason to embark on QE3 to try and stimulate the economy.

The issue there is that maybe QE3 will not have the impact needed. The Fed has already made money supply easy and making it easier may not cause the spark to growth they desire.

At this point any significant boost to our economy may well have to come from a clearer picture out of Washington i.e. the election, and the fiscal cliff. For that we are going to have to be patient. Then again just announcing QE3 will cause the stock market to rise but it is more jobs we need for a sustained rally.

Good Trading
Steve Peasley

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