uncanny similarities between September 2000 and September 2006 ...
(snip)"In September of 2000, economists and bullish money managers were telling us that "This time it is different." They specifically pointed to the fact that the market was close to making new highs. We were heading for a soft landing. Not one of the Blue Chip economists at the time was predicting a recession. As an aside, we now know the economy was slowing dramatically and would be in recession by March of 2001, two quarters before the normal four quarters the Fed study suggested.
The Fed would be cutting rates less than five months later, but as we know, a recession came anyway"(snip)
from
while author John Maudlin only touches on this data to support a larger point, his chart 55 also makes an ominous prediction ... that US investment in housing over the next few months is very probably going to fall by some 2.5-3% of GDP based on past cycles ...
what makes this important is that 2.9% is the current growth rate of the GDP, meaning that housing alone could turn the GDP negative without beginning to count in 'ripple effects' in other industries.
What's also important is that in dollar terms 3% of the GDP means 3% of 50 TRILLION dollars ... in other words 3/4 of a TRILLION dollars of US economic activity is likely to soon disappear. That's $2,500 per year disappearing for every man, woman and child in America's 300 million population, or $10,000 per year for a typical family of four !
Obviously, it won't be hard to figure out how Americans are likely to alter their financial spending habits to compensate ... by massive reductions in spending levels for anything that is not 'essential'.
~




Reply With Quote

Bookmarks