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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Wyätt Gwyön who wrote (62575)	6/2/2006 8:16:40 PM
From: mishedlo	Read Replies (1) \| Respond to of 110194

i'm pretty sure somebody who's good with stats like CR or the guys at CI could use oil consumption data to predict a US recession in near real time with good reliability. the caveat is that this assumes we don't have a breakdown in the CL/GDP relationship of the past 23 years. that probably will happen at some point thanks to peak oil. perhaps it already would have happened except for the housing bubble. if past is prologue, we will have a period where consumption contracts considerably. obviously it will take more than $3 gas to make this happen. maybe $4 or $5. we will have a 3- or 4-yr period where the economy readjusts to the new reality of secularly higher CL, and then a new relationship will be established (with, ideally, GDP growth occurring at flat CL consumption). of course, if peak oil is for real then we will have constantly declining CL consumption for the rest of the century and all bets are off. An excellent answer and yes CR seems damn good with stats. Unfortunately I do believe we are in a peak oil situation and I also believe we are in a housing bubble unlike any other the country has ever seen. A recession is more likely to be caused by a housing bust IMO than a spike in oil prices. Thus I disagree with your assessment that it will take $4-5 gasoline prices to do it. I am willing to bet on that in fact but it is possible that some geopolitical event triggers $4 gasoline before I am proven correct. IOW people would blame oil when in fact it was going to happen anyway. Mish