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The sharp pullback in economic growth during the final three months of 2005 shows the law of gravity has not been repealed.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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The stress on household finances in coming weeks will be the greatest since the last recession in 2001,
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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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We have unmistakable signs that households are becoming more cautious about spending.
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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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Housing prices in many communities will appreciate less rapidly --- and in some communities actually fall. This reduces the wealth effect from real estate assets, shrinks home equity borrowing, and increases pressure on households to replenish their savings.
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The current account deficit is a ticking time bomb. We don't know when it s going to explode, but it cannot continue the way the White House describes.
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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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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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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 borrowing costs on the rise and the wealth effect from real estate assets diminishing, something has to give.
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It's fairly safe to say that the trade deficit may have peaked now that oil prices are falling and the U.S. economy is showing signs of slowing down.
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There is a real sense of foreboding about the economy now that Katrina has struck with full force. This storm will be the most devastating ever for the U.S. oil and refining industries.