One shouldn't ignore the "rolling recession" phenomenon that has manifested itself over the last 20 years. That the business cycle hasn't been repealed is self evident (I, for one, never believed that). But it is getting far too late in the game for some people to be saying (some hopefully) that, "All right. But when the auto and housing sectors FINALLY play along, we'll get the REAL collapse." The time for their prediction has come, and gone.
Those sectors DID NOT play along, and much of the rest of our economy has completed its bottoming out for this cycle, and is starting to move forward, albeit in small steps.
The overwhelming probability now is that the recession will roll once more, from the sectors that it has already sufficiently infected-and which are now coming coming back, either by bottoming or surging upward-to the slightly overbought sectors like housing autos.
Another prediction, that I did buy into for a while, was that of the Fed and Congress creating deflation in their madness to "solve the deficit/debt problem". While there may still be a resurgence of that madness, I don't think it has resonated with the voters for this season (virtually everybody now knows the "SS Trust Fund" is a propaganda scam), and the insane arguments are already fading. Thus deflation seems at this point, to be a disease which we have avoided for the time being.
I look for a few years of flat housing prices, not declining ones, and a brief respite in autos before another surge in buying. Interest rates, specifically mortgage rates, will continue to remain at record lows until the recessed portions of the economy (such as capital spending) become red-hot. Then residential real estate will have it's correction, and that may pass virtually unnoticed. Commercial real estate is already correcting nicely, as it must do-and does-every decade or so... |
