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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Ramsey Su who wrote (37303)7/30/2005 9:53:22 AM
From: russwinter  Read Replies (2) of 110194
 
Contrary Investor on 7/28 did a more truthful analysis of consumption and residential investment with two charts I hope Ild picks up for his file. One shows fixed residential investment as a percent of GDP now at about 5.8% (as high as it's ever been). The chart goes back to 1960, and shows big gyrations. The mid point is about 4.5%, so a simpleton would argue that the economy would only lose 1.3% of it's "steam", if housing investment "normalized". Of course if there were a bust, residential investment could fall way off, down to 3.0%?

It's the other chart, both fixed residential investment and the much larger personal consumption expenditures combined, that shows the real story. That number is 76%, versus the average of 69.2%. It well illustrated how imbalanced and consumption overheated, the US economy has become.
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