tilted towards services.
Click "Service Fatigue" and
"Service Economy Peril"
The Service Sector represented 84% of US. Employment.
Jobs are dependent on consumption.
The Y/Y percent change in Service Consumption has decline to
historic lows.
This has led to job destruction surpassing that of the feeble
Manufacturing Sector...
It is not unreasonable to expect the 18-month rate of change in
Real Service Consumption to decline further...
Leading to a weakening in pricing power...
With no relief in sight from Wages...
The implication for investing: the economic pain will continue.
10 comments:
Will. I was just wondering if you might give us your outlook for markets in the next month or 2 if you can. Are we going straight up into early may or do we start declining into the end of the month. Any thoughts? Much appreciated.
Thanks
Trinity
IMHO, 2009 plays just like 2008 but with up to a couple weeks off the script. We are at the point analogous to 4/3/08 or 4/21/08. My sentiment indicators suggest that we are very close to a top though.
Who knows, maybe Wills target of 875 will be the top?
He was certainly correct with the 780 pullback.
Will, you have a lot of insight into macroeconomics. I share your views on the grim future, but mostly from the perspective of demographics (baby boomers bust), credit bubble bust, continuing decrease in leverage, and future increase in interest rates (when China stops subsidizing this country). So I have no illusions that a major depression is unavoidable. The only difficulty I have is the issue of deflationary depression vs inflationary depression. The investment postures are radically different. Back in 2008 I considered only inflation and was almost wiped out.
Many investors are counting for inflation again but the dollar charts are suggestive of another major jump up.
Will, do you have an opinion on the inflation/dollar issue ST or LT?
Thanks,
Jack
Good insight. But . . . employment is a lagging indicator, yes?
Eric
There seems to be a great deal of optimism about this "not being a depression". It is still expected to be, however, the worst recession in over fifty years. Apparently many still believe in a Q3 recovery. It's not in the cards. We're seeing a sucker's rally. Much like the summer of 2002 except earlier in the business cycle. I'm a seller.
Just my thoughts.
Tim
"Employment is a lagging indicator."
True in the aggregate, but not in the parts. Bromides are not useful investing advice, nor useful posts.
M
Guys,
See paperless Economy blog for several long term employment vs S&P and GDP graphs. It appears to be a coincident indicator.
SS
Will,
Thank you for your post.
Some anecdotal housing evidence from the DC area inner suburbs. Effective interest rates for people with good credit are down to about 4.5%. Many homes are appearing on the market, but many seem to be disappearing as well. With 5-10% down, FHA loans don't seem to be that hard to get. Nationwide the picture may be different, certainly, but by mid-summer, I wouldn't be surprised if existing home supply came down to 7-8 months nationwide. At that point, the home construction industry may begin to see signs of life.
In terms of the inflation/deflation debate, I still see big deflation, as I suspect you do. A cheaper dollar would stimulate American manufacturing and exports, but I don't see how that would happen any time soon. Your thoughts?
Let me guess. When Will doesn't respond, it means he disagrees, right?
I believe that you cannot build an economy on cpas' lawyers' marketing consulting investment advisors ect. All of this stuff is just an illusion thats it period.
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