Today NAHB – index of builders confidence fell to 28. Let compare data from the last consumer-driven recession and today:
- The index fell from 44 in February of 1990 to 32 in July 1990 (the official recession start)
- During the recession, the index fell from 32 in July 1990 to as low as 20 in January of 1991. Then it quickly rebounded to 36 by March, when recession ended
- This time the index fell from 39 in February this year to 28 today. This is already below the level of the last recession start
- As the index level of 32 is sufficient to signal a recession, we already had 4 months below that level:
- 30 in September 2006
- 31 in October 2006
- 30 in May 2007
- 28 in June 2007
I don’t know how we are not in recession yet. Or maybe we are?
June 18, 2007 at 3:32 pm
I don’t know how we are not in recession yet. Or maybe we are?
A housing recession at least. But the corporations are flush with cash, according to the herd (at least for now – private equity cash?)
This thing is gonna get ugly, no news there, but I’m amazed how “resiliant” (I think that’s the word they like to use) the consumer is.
Recession in tranches? And the question: Which tranche are you in?
June 18, 2007 at 4:55 pm
billygoat, thanks, great observation. I agree that 4 years of record profits is on corporate books, which makes them very strong.
>>> Which tranche are you in?
Do you mean ABX tranches? So far AAA tranches are strong, AA tranches are bending down, but everything below that is between decline and panic