The Friday jobs numbers were very good, with 144,000 new payroll jobs, and an upward revision of 59,000 to June & July. The unemployment rate dropped to 5.4%, the lowest since October 2001.

Is the Institute for Supply Management released their two monthly reports this week. The manufacturing index and the non-menufacting index both dropped below 60 (to 59 and 58, respectively), but these are both very strong numbers. They mean that the ecomony is still growing, just a little more slowly. Housing demand remains strong, and durable good orders were up, as well.

On the not-so-good side, productivity didn't increase as quickly, retail sales are soft, and first-time unemployment claims remain stubbornly high; the four-week moving average for that last has barely budged since March.

It looks as though the economy is coming up on a critical point. It's unlikely to slip into recession, but it's possible too that we won't see much more growth. With the Feds running record deficits, more stimulus probably isn't the answer, although making the tax cuts permanent would help in planning.

Relief from oil prices would help, but our economy is much less dependent on oil than it used to be. It's not just oil, but all raw materials prices that are going up. This is the "stag" in "stagflation," not the "flation." (Inflation is casued by Arthur Burns.) If you're spending more money on wood, for instance, you may still not be able to raise prices, because there's not enough currency around to buy at higher prices. It does mean that there's less money for you to do other things, like expand. Like hire people.