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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (76072)	3/13/2008 5:09:12 PM
From: ajtj99	Respond to of 116555

Kind of lost in the excitement today was the 0.6% drop in February sales. On top of the previous 0.7% drop in December and 0.4% gain in January, we're at a 3-month run rate of 0.9% drop in consumer spending, which accounts for 2/3rds of the economy. However, factoring in inflation of about 1.5% during that 3-month period, we're really looking at nearly a 2.5% drop in real consumer spending, or a near 10% annual rate of decline. That 3-month trend, if applied forward, would suggest a contraction of GDP of about 6.5% on the reduction in consumer spending alone. Figuring business and government contributions to GDP may be a wash, this 3-month trend applied forward would suggest a 4.3% contraction in annual GDP. I'm going by memory here, but I believe the worst contraction we've seen since the 30's was about 4.5% in the 1981 recession. Now, with all the rebate checks going out in May we'll likley have a bump in consumer spending in May/June. However, we've still got March and April to deal with before that.