The four-week moving average of initial unemployment claims went down to 376,500. This measure sure is stubborn and is not cooperating with the recession crowd.

Inflation has taken a real turn for the worse, as we knew it would. Stagflation is still the operative mode. The annual Consumer Price Index (CPI) rate for June was 5.0%. The three-month rate is running at 7.9%. Energy is up 24.7% in the last 12 months. The Producer Price Index (PPI) report was worse. It has risen 9.2% since last June. That’s over 14% when you annualize the data for the last three months.

As I mentioned in Wednesday's ERC Notes, inflation does not just affect your running costs. The psychological effect that it has on employees is also important. They're spending more to come to work, and their wages are not likely to keep up with the rise in household expenses. A household's second wage-earner may have a job that is in peril because of economic adjustment, or there may be rumors about job problems that weigh on their morale. Make sure key employees are happy: these higher consumer prices may push them to seek other jobs with higher wages at a time when you can least afford to lose their services. When working on your costs, strive for long-term efficiencies that are permanent and not gimmicky. If you are downsizing, be very clear about what is going on and why, and try to do it only once. The “slow bleed” approach only encourages employee thinking like, “Gee, Bertha's not here anymore; maybe I'm next,” decreasing productivity with more absences and a lack of urgency in the performance of regular tasks. Be sure to look out for your customers’ best interests: show them how they can use print more effectively and at lower total cost. Clients are being pressed to reduce costs by their accountants and planners. Now may be an exceptional opportunity to find tasks and functions that they can outsource to you.