You have been predicting a recession in the near future. Given the 5.6% GDP growth for 1st Quarter 2006 in the US, do you think a recession will happen soon?
Despite the strong 5.6% 1st quarter GDP growth in the US, a recession is looming. The declining housing market coupled with a drop in consumer spending are the two main factors that will lead to a recession within the next 12 months. By the end of this fall, the economic news will be sour. Get ready, a significant recession is coming.
What will happen with short term interest rates as set by the Federal Reserve?
Interest rates will reach 5.5% this year. They may even reach 5.75%. It is unlikely that the Feds will raise further given the coming recession.
What will happen with the housing markets in the coming months?
By the end of fall 2006, bubble markets throughout the US will be in bad shape. Inventory will be at record highs, prices will be falling, and layoffs will be spreading in the housing related industry. By December, Joe Sixpack will be well aware of the significant declines occurring in the bubble markets.
How will the 2006 Christmas shopping season fare?
It will be bad. Consumers will be pulling back and spending significantly less in real dollars than in 2005. Retailers will be disappointed.
Sunday, July 16, 2006
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