Consumer about to crash, see my chart!

[icm63]

Further to mu post , review of USA GDP here : http://www.itulip.com/forums/showthread.php?t=4752

The chart below is an analysis of USA Consumer GDP. The top panel is USA Consumer portion of GDP. Data is upto 2008 Q2.

My signal line, is the misery index, 4th panel down, pink line. The only time when the misery index failed to signal consumer GDP falling to ZERO or less was in the 1970s recession. This is also at a time with the monthly stock of houses for sale stayed below 7 months in the 1970s, currently the monthly stock of housing is 11 months with the misery index above 10. So the housing situatiuon is much worse than the 1970s.

Misery index : Unemployment rate, inflation, house price change (inverse).

The 3rd panel down is the trend of non and durable goods with GDP both are at the ZERO line. Another confirmation that the consumer is at the cusp.

The current sell off in oil wil eventually lower inflation a little, as it did in late 2007.

But I expect the comsumer to sink to zero in 2008 q3 and q4. Confirming a USA recession. Add this to a rally in $USD with a slow down in exports, this cant help the bull case.

Chart updated - panel 2 was incorrect.
ConsumerGDPStudy.jpg

[phirang]

Re: Consumer about to crash, see my chart!

Time for war, the ultimate stimulus package!

[rros]

Re: Consumer about to crash, see my chart!

Wouldn't consumer crashing greatly reduce imports, diminishing the trade deficit, strengthening the dollar and making Asia go down the toilet? A direct 20% exports to the USA may not mean *too* much to China. Except that a good chunk of all their other finished or semi-finished products exported to the rest of Asia will end up in US shores. So in spite of a potential local recession, where else will investors place their bets when the rest of the world will be in worst shape?

[icm63]

Re: Consumer about to crash, see my chart!

Reduce imports thats true, but dont forget that will be a lagging effect, after the event, as import reduction will be a reaction and not a leading change.

Thats why I guess its NET Exports and Imports is the true effect. I feel a fall in imports will not be enough to offset the consumer slide. The chart shows this, see link at the top of the post for more on GDP trends.

UDPATE1: Things like this are not good !
Fed Says Banks Toughen Lending Standards Amid Slump
Aug. 11 (Bloomberg) -- The Federal Reserve said more banks made it harder to borrow money as defaults and delinquencies on home loans soared and the economy faltered.
http://www.bloomberg.com/apps/news?p...e04&refer=home

UPDATE2: The misery index in the chart is made of inflation headline rate and unemployment rate and falling house price change, of course if this was to reverse quickly, one would have to conclude that consumer may come back strongly. I guess we are all watching these three large gorrillas. Employment, Inflation (oil) and Housing.

[phirang]

Re: Consumer about to crash, see my chart!

Reduce imports thats true, but dont forget that will be a lagging effect, after the event, as import reduction will be a reaction and not a leading change.

Thats why I guess its NET Exports and Imports is the true effect. I feel a fall in imports will not be enough to offset the consumer slide. The chart shows this, see link at the top of the post for more on GDP trends.

UDPATE1: Things like this are not good !
Fed Says Banks Toughen Lending Standards Amid Slump
Aug. 11 (Bloomberg) -- The Federal Reserve said more banks made it harder to borrow money as defaults and delinquencies on home loans soared and the economy faltered.
http://www.bloomberg.com/apps/news?p...e04&refer=home

UPDATE2: The misery index in the chart is made of inflation headline rate and unemployment rate and falling house price change, of course if this was to reverse quickly, one would have to conclude that consumer may come back strongly. I guess we are all watching these three large gorrillas. Employment, Inflation (oil) and Housing.

The US bankers have the Treasury by the cohenes, since much of the mortgage industry paper is owned by foreigners. How they managed to insinuate themselves into this powerful position is beyond me.

[swgprop]

Re: Consumer about to crash, see my chart!

The US bankers have the Treasury by the cohenes, since much of the mortgage industry paper is owned by foreigners. How they managed to insinuate themselves into this powerful position is beyond me.

The Federal Reserve Act of 1913 created the cartel we are cursed with today.