Bernard Baumohl
Bernard Baumohl
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The sharp pullback in economic growth during the final three months of 2005 shows the law of gravity has not been repealed. When consumers are burdened with heavy debt loads, rising interest rates, higher energy costs, no personal savings and household income growth that falls below inflation, something had to give. This retrenchment in spending was generally foreseen, though economists weren't sure on the timing and magnitude.
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Katrina has shaken the very foundations of the U.S. economic expansion when it ruined much of America's energy infrastructure, ... While a recession is unlikely, the probability of stagflation has greatly increased with inflation moving higher even as the economy slows.
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There are signs that indicate economic strength might strain the economy, which would cause inflation.
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The central bank seems more worried than before that resources feeding the U.S. economic expansion are getting scarce.
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The latest batch of economic news does not paint a very encouraging picture on the sustainability of consumer spending.
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The stress on household finances in coming weeks will be the greatest since the last recession in 2001,
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Bond traders are concerned that the economy may be growing too fast, given where we are in the business cycle.
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The tech industry is creating its own shakeout,
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When consumers are burdened with heavy debt loads, rising interest rates, higher energy costs, no personal savings and household income growth that falls below inflation, something had to give.
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While the DOJ maintains long-standing, black-and-white parameters to seek out monopolies, the FCC tends to undertake a far more subjective and changeable analysis.
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We have unmistakable signs that households are becoming more cautious about spending.
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On the other hand, Greenspan seems satisfied that his tightening has had a lasting effect. He's likely to stand pat for the rest of the year.
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With household finances already under considerable stress, one has to wonder if another round of rate hikes will lead to a more severe cutback in consumer spending.
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With borrowing costs on the rise and the wealth effect from real estate assets diminishing, something has to give.