SOURCE: Decision Analyst, Inc.

June 06, 2008 14:21 ET

The Decision Analyst Economic Index Remains Depressed in May

Inflation Is Looming National Disaster

ARLINGTON, TX--(Marketwire - June 6, 2008) - Decision Analyst's U.S. Economic Index remained at its lowest level in a decade (88) in May. The Index has dropped 20 points over the past year, and clearly indicates that recession is here. The chart shows the U.S. Economic Index for the past 13 months.

"Seventy-three percent of adults in the U.S. reported in May that prices of goods and services are rising rapidly. Lower income households are feeling even more pain, since gasoline and food represent a larger share of their household budgets," said Jerry W. Thomas, President/CEO of Decision Analyst. "We are facing a looming inflation disaster in the U.S. The Bureau of Labor Statistics is understating the true inflation rate, and the Federal Reserve Board appears to be asleep at the throttle. It's 'holding' when it ought to be increasing interest rates," said Thomas. "The Federal Government's inflation models are grossly understating the actual rate of inflation," said Thomas, "and this means that the U.S. economy has been in recession for six to nine months or longer already. The Federal Reserve must move quickly to raise interest rates and constrain the money supply to avert an inflation catastrophe."

Among the components that make up the Economic Index, the positive factors in May were "business activities" and "consumer purchase intent" for durable goods. The largest negative factor in the May Economic Index was "pessimism about inflation" (rising costs of goods and services).

Methodology: The Decision Analyst Economic Index is based on a monthly Internet survey of several thousand households balanced by gender, age, and geography. The survey is typically conducted in the last 10 days of each month. The Index is calculated from nine different economic measurements, using a sophisticated econometric model. The result is a snapshot of current U.S. economic activity, as seen through the eyes of representative consumers. Decision Analyst also conducts concurrent economic surveys in Argentina, Australia, Brazil, Canada, Chile, China, Colombia, France, Germany, India, Italy, Mexico, Netherlands, Peru, Russian Federation, United Kingdom, and Venezuela. Whenever the Decision Analyst Economic Index is greater than 110, it tends to signal an expanding economy. An Index value of 100 to 110 suggests a slow-growth economy, and near or below 100 generally indicates economic contraction. These guidelines vary by country, however.

About Decision Analyst

Decision Analyst (www.decisionanalyst.com) is a leading marketing research and marketing consulting firm specializing in advertising testing, strategy research, new product development, and advanced modeling for marketing decision optimization. The firm delivers competitive advantage to clients throughout the world in the consumer packaged goods, telecommunications, retail, high technology, medical and pharmaceutical, utilities, and e-commerce industries. Decision Analyst operates American Consumer Opinion® online, one of the world's largest Internet-based, consumer-opinion panels with more than seven million members.

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