The Richwood Report

One indication of the health of the economy is the state of the machine tool business. When consumers and businesses buy lots of manufactured goods, the manufacturers buy lots of machines. Right now the machine tool business is running at a high level. All the news isn't good though. Consumer debt is also rising which means people are buying manufactured goods with borrowed money. Quote:

Not only will consumers be dealing with $2.75 to $3.00 per gallon gas prices in 2006, they will also begin to deal with additional costs related to financing homes and all the things that go into them. The net result of gasoline prices and higher financing charges means a consumer who will have less money available to spend on other discretionary purchases that spark economic growth. As consumers adjust to less discretionary income, they will undoubtedly need to rethink their own personal expenditure levels. If they retrench, less demand can lead to less revenue and less profits for companies that provide both durable and non-durable goods for consumers.

More indicators with charts are here.