Every recession since 1952 had significant declines in cyclicals defined as durable goods and residential construction.
I left off the Covid recession because it dwarfs everything else.
These charts are an expansion of the idea presented by Eric Basmajian at EPB Research.
Contributions to GDP SAAR
It’s durable goods more than residential construction that appears to be the driver.
But it’s housing that drives durable goods, and existing home sales far more than new home sales.
Personal Consumption Expenditures
Services, durable goods, and nondurable goods are subcomponents of PCE. It’s that bottom green durables line that is the driver to recessions and expansions.
Autos and parts are about a third (734 billion) of durable goods. That data is quarterly or I would have plotted it.
Cyclical Components of GDP, the Most Important Chart in Macro
For more on cyclical components including a video by Basmajian, please see Cyclical Components of GDP, the Most Important Chart in Macro
Housing Bust Underway
Basmajian’s theme ties in with the housing bust now underway.
For discussion please see Expect Huge Negative Revisions to New Home Sales as Sales Crash and Orders Cancelled
Also note Existing Home Sales Skid Another 3.4 Percent in May, Down Fourth Month
No one can say what the future cyclical contributions will be, but they rate to be damn ugly.
This post originated at MishTalk.Com.
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Ellen Brown: “such maturity transformation has been the cause of
bank runs and financial crises since the dawn of the financial era”
Disintermediation (an outflow of funds or negative cash
flow) should have only applied to the nonbanks since Roosevelts’ 1933 Banking
Holiday (with the initiation of numerous legislative backstops and policy
safety nets).
There have been 11? boom/busts in housing since then
(coterminous with an inverted yield curve).
But commercial bank credit has never collapsed — except the
small drop during the GFC where commercial bank credit fell by 1.4% between
April 30, 2008 to March 24, 2010, from 8,721.5 trillion to 8,601.9 trillion
dollars.
HONG KONG, July 14 (Reuters) – Chinese banks could face hefty writedowns in their mortgage businesses as growing numbers of homebuyers threaten to stop loan repayments to protest against unfinished apartments sold to them, analysts said.
The mortgage bad-loan ratios for banks could rise three- to five-fold as a result of homebuyers stopping mortgage payments, analysts estimate, adding the protests will significantly add to lenders’ risk exposure to the cash-starved property sector.
Chinese authorities held emergency meetings with banks after becoming alarmed that an increasing number of homebuyers were refusing to pay mortgages on stalled projects, Bloomberg reported on Thursday, citing people familiar with the matter.
Several local governments had also met with homebuyers this week, analysts and local media said, without providing details.
“A primary concern is if this snub spreads too quickly and more home buyers follow suit only because their projects are going slowly, or simply out of a pessimistic outlook for the property sector,” said Shujin Chen, equity analyst at Jefferies.