The Fed stated that economic growth had slowed “markedly in recent months,” and that the cut was necessary.

Futures are trading higher this morning, and it looks like we should break the five day losing streak on Wall Street, and get some much needed bounces in some pretty beaten up stocks today.

According to the Labor Department, inflation moved up 0.2% in April, which was slightly under the 0.3% inflation in March. Analysts had been expecting to see inflation rise by 0.3% again in April.

If you exclude food and energy costs, then you are left with a core inflation, which was really well behaved in April, only rising by 0.1% during the month. Analysts had been expecting to see core inflation growth of 0.2% for the month.

While it is good to see that inflation is not rising as rapidly as some had thought, you have to take into account the current run up in oil prices. With oil trading up close to $127 a barrel, inflation could be getting ready to really jump. Analysts are warning that the current record high oil prices have still not be felt at the consumer level yet, and their impact could be rather dramatic.

Looking at inflation for the year, overall inflation is now running at an annual rate of 3%, compared with the 4.1%  increase that we saw in all of 2007. The Federal Reserve, which has been slashing interest rates lately in an attempt to fight off a recession, has signaled that it would more than likely pause the rate cuts in order to fight off any unwanted inflation in the months to come. The next time the Fed meets will be the third week in June, and dont expect the April numbers to lead them to change their stance and cut rates. I am sure that everyone is still waiting for the other shoe to drop on the recent run up in energy prices.

You can find a pretty nice graph of CPI inflation since 2000 over on economistblog

According to a report from the Commerce Department today, the economy grew at 0.6% during the first quarter of the year. That is the same growth that we saw in the last quarter of 2007. While the news could have been better, it definitely could have been a lot worse. Many analysts were expecting to see growth slow to 0.5%, or even possibly lower.

We have been hearing rumblings for the past year about the looming recession on the horizon, and many thought that this would be the quarter that we saw economic growth fall into negative territory, and now there are already analysts coming out and predicting that the current second quarter will definitely see such an event. Let’s hope they are wrong once more, but the writing is definitely on the wall… but then again it has been for some time now too.

Soaring energy prices, and the continuing credit crunch that has gripped a large part of the country will continue to apply pressue to consumers. Will we get some relief in the months to come? Only time will tell. Currently oil is trading at $114, so prices would still have a long way to fall before we got back into any sort of “cheap oil” environment.

So, it could have been a lot worse. At least we are seeing growth, just really really slow growth. We will see just how today’s report impacts the expected rate cut from the Federal Reserve later today.

Looking at total unemployment, the unemployment rate for the country rose from 4.8% up to 5.1%. This could be one of the biggest signals that the country has already been contracting. This is the highest rate that the country has seen since back in September 2005 when the country was hit with massive Gulf hurricanes.

There was no one single sector that can be blamed for last month’s jumps. Unemployment rates rose in several sectors, including construction, manufacturing, retailing, financial services and various business services. On the other side of the coin, there were a couple sectors that did see some gains during the month. These included education and health care.

There is a still a pretty big debate taking lace over whether or not the country is, or at least will be, in a recession before the current situation plays itself out. Some have argued that even though GDP growth has not dropped for two consecutive quarters that the country has already slipped into a recession. Others are holding steady, and will not even mention a possible recession unless we see the true definition of a recession play itself out.

Before today’s numbers were released, analysts had been expecting to see a drop of around 50,000 jobs in March, so it was no real surprise that unemployment rose, it was just a surprise how much the number did indeed rise. This was the largest one month jump in job losses since March 2003.

Are we seeing the first signs of a true recession hitting the country? Only time will tell, but this week was the first time that Federal Reserve chairman Ben Bernanke formally stated that there was a good chance the country was headed into a formal recession. What he plans to do to fight such a possibility was not mentioned, but it led Wall Street to believe that we will be seeing more interest rate cuts later this month when the Federal Reserve meets again.

The total number of unemployed people in America is now sitting at 7.8 million and rising.

Ironically, it was Bernanke himself that had initially put the markets into the red when he stated that there was a decent chance that the U.S. economy would contract during the first half of this year. With all the recession rumors and fears floating around these days, his comments earlier were enough to spook the markets into an early sell off.

Luckily, Bernanke testified in front of Congress that we should not expect to see any additional financial institutions collapsing the way we saw Bear Stearns go down last month. After hitting a massive liquidity crisis, Bear Stearns was forced to look for help, and was bailed out by the Federal Reserve, and JP Morgan which is in the process of finalizing its purchase of the company.

It is no secret that the past 6 months have been tough on Wall Street. The credit crunch, weak dollar, and collapsing real estate market have taken their toll, but we are starting to see some signs that traders are beginning to bet that the worst has come and gone. How long the recent rebound will last (if at all) remains to be seen.

The dollar also fell to a new two and a half year low against the yen in Asian trading, as the yen fell to under 108.

Traders are continuing to worry about the fate of the dollar and are now expecting to see another interest rate cut from the Federal Reserve in its attempt to solidify the economy in the face of the current subprime mortgage crisis that has been hampering the market since around August of this year.

Prices are being driven by supply concerns and expectations that the FED will be cutting interest rates again at its next meeting. Later this morning the US Energy Department is going to be releasing last week’s inventory numbers and we will get a better picture of the current supply constraints at that time.

Analysts are expecting to see an 800,000  barrel increase, when the report comes out we will update with all the actual results.

Well, thanks for confirming what most of us already knew… record high oil prices and the severe housing slump are going to weigh on the American economy, and that an economic slowdown is on the way. The Federal Chief gave no signal though whether or not we can expect to see more interest rate cuts at the Fed’s next meeting.

The Fed finds itself in a tough situation right now. The stock market has been poor because of the weak financial sector and the problems coming out of the mortgage crisis. In order to help the market get back on track the Fed will typically lower interest rates, but at this point in time the Fed may not be able to lower them too much more because of the fear of inflation and pushing oil prices even higher than they currently are.

With oil testing the psychological $100 barrier, many experts are also starting to wonder just how hard an impact these rising energy costs will be felt by corporate America.

Definitely some tough times ahead, and on top of it all the dollar continues to trade at all time lows against the euro. Yes, Bernanke, the economy is in danger of a dreaded recession… it is time to figure out what to do and do it now, assuming that you haven’t waited too long as it is!