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

To: Perspective who wrote (73082)	10/27/2006 9:23:05 PM
From: CalculatedRisk	Respond to of 110194

I've looked at New Home sales and recessions, and Residential Investment and recessions. Based on previous recessions, the lag is about over ... and if there is a recession, it will start in the next 2 to 3 quarters. This graph might be useful: i20.photobucket.com From this post: calculatedrisk.blogspot.com "In general, residential investment leads nonresidential investment. There are periods when this observation doesn't hold - like '95 when residential investment fell and the growth of nonresidential investment remained strong. Another interesting period was 2001 when nonresidential investment fell significantly more than residential investment. Obviously the fall in nonresidential investment was related to the bursting of the stock market bubble. But the most useful information is that typically recessions are preceded by declines in residential investment." Notice that over the last 50 years, every time there was a serious fall in residential investment, the U.S. had a recession (except mid-60s with the Vietnam war defense spending). If you go back a little further, the Korean War had the same impact in the early '50s.