Post by unlawflcombatnt on Nov 1, 2006 17:10:13 GMT -6
Today's Construction Spending report provides further evidence that we are already in a Housing Recession, if not an overall recession. Total Construction Spending declined 0.3%, which was -0.4% from what the market analysts had predicted. September's Residential Construction spending declined 1.0% from August, from $617 billion down to $610 billion. This is the 6th straight month that Residential Construction has declined.The year-over-year (September-to-September) change was -$45 billion, or a -7.3% yoy change. This September-to-September change is in stark contrast to the previous year's September-to-September increase of $75.6 billion, or a +13% change.
The 3rd quarter decline in Residential Construction Spending was $29.4 billion, or an annualized decline of $117 billion for the quarter. This reduced the annualized 3rd quarter current dollar GDP by 21%. Below is a modified copy from Briefing.com of today's Construction Spending report.
Adding the decline in Residential Construction to the double digit declines in both New Home Sales and Existing Home Sales, a parallel decline in housing-related employment, a decline in both New Home and Existing Home prices, a predicted decline in home equity funded consumer spending, and we have the making of a Housing Recession.
With a 3rd quarter GDP growth of only 1.6% (which would have been only 0.9% if not for an artifactually high auto production increase of 26%), we have all the ingredients of a full blown recession during the next year.
The increase in Consumer Spending for September was only +0.1%, or an annualized increase of only +1.2%. Adjusted for the year-over-year inflation rate, this comes out to approximately a -2.0% change.
A decline in consumer spending means a decline in production demand, a decline in demand for workers to provide production, a demand-induced decline in wages, and further declines in aggregate labor/consumer income and spending power.
The borrowing bubble is deflating, as home values, and the attendant equity declines. Home equity-financed consumer spending has nowhere to go but down, as home prices & equity values decline. Meanwhile, spendable consumer income decline even further as ARMs reset, subtracting still further from money available to purchase goods.
The 4th quarter correction for the spurious contribution to 3rd quarter GDP will likely put GDP below 1%. In addition, as more ARMs reset, housing-related employment declines, automobile production employment declines, and credit card limits are maxed out, consumer spending will decline even further.
Manufacturing jobs continue to be lost, further reducing American labor income and spending power.
Leading Indicators, considered a good broad indicator of the economy as a whole, have declined a total of -0.9% over the last 6 months. (A 6-month decline of over 1.0%, with 3 consecutive monthly declines, is considered a harbinger of recession.) And without the inexplicable increase in stock prices, which has kept Leading Indicators from falling even further, Leading Indicators would already be signaling recession.
The most predictive single "leading indicator," according to market analysts, is the interest rate spread. An "inversion" in the interest rates, or when long term rates are lower than short-term rates, is considered predictive of a recession. There has now been an interest rate inversion for 3 straight months.
All recession warning lights are blinking red, while Wall Street propagandists claiming all of the negative statistics are misleading, and how the economy is still "strong, and getting stronger."
The 3rd quarter decline in Residential Construction Spending was $29.4 billion, or an annualized decline of $117 billion for the quarter. This reduced the annualized 3rd quarter current dollar GDP by 21%. Below is a modified copy from Briefing.com of today's Construction Spending report.
Adding the decline in Residential Construction to the double digit declines in both New Home Sales and Existing Home Sales, a parallel decline in housing-related employment, a decline in both New Home and Existing Home prices, a predicted decline in home equity funded consumer spending, and we have the making of a Housing Recession.
With a 3rd quarter GDP growth of only 1.6% (which would have been only 0.9% if not for an artifactually high auto production increase of 26%), we have all the ingredients of a full blown recession during the next year.
The increase in Consumer Spending for September was only +0.1%, or an annualized increase of only +1.2%. Adjusted for the year-over-year inflation rate, this comes out to approximately a -2.0% change.
A decline in consumer spending means a decline in production demand, a decline in demand for workers to provide production, a demand-induced decline in wages, and further declines in aggregate labor/consumer income and spending power.
The borrowing bubble is deflating, as home values, and the attendant equity declines. Home equity-financed consumer spending has nowhere to go but down, as home prices & equity values decline. Meanwhile, spendable consumer income decline even further as ARMs reset, subtracting still further from money available to purchase goods.
The 4th quarter correction for the spurious contribution to 3rd quarter GDP will likely put GDP below 1%. In addition, as more ARMs reset, housing-related employment declines, automobile production employment declines, and credit card limits are maxed out, consumer spending will decline even further.
Manufacturing jobs continue to be lost, further reducing American labor income and spending power.
Leading Indicators, considered a good broad indicator of the economy as a whole, have declined a total of -0.9% over the last 6 months. (A 6-month decline of over 1.0%, with 3 consecutive monthly declines, is considered a harbinger of recession.) And without the inexplicable increase in stock prices, which has kept Leading Indicators from falling even further, Leading Indicators would already be signaling recession.
The most predictive single "leading indicator," according to market analysts, is the interest rate spread. An "inversion" in the interest rates, or when long term rates are lower than short-term rates, is considered predictive of a recession. There has now been an interest rate inversion for 3 straight months.
All recession warning lights are blinking red, while Wall Street propagandists claiming all of the negative statistics are misleading, and how the economy is still "strong, and getting stronger."