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By New_Deal_democrat March 2, 2016 8:44 am
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Houses and cars wobble
Last October I wrote a piece here entitled "Houses and Cars:  why the overall US economy is still OK"
 
I wrote in that article that while there was a shallow industrial recession, manufacturing jobs now only accounted for less than 10% of all employment, so the impact on the consumer - who is 70% of the US economy - was much less than in the 20th Century.
 
I continued:
 
"To see if the overall economy is set to start suffering, watch the leading signs of the consumer.  And that means, watch the big durable products that consumers buy:  houses and cars.

Housing typically tops 1 year or more before a recession begins, with cars following about 6 to 9 months before the onset of the recession."

....
"The US consumer is busy buying houses and cars.  So while I accept that a shallow industrial recession is real, I don't think it is enough to tip over the US economy, when less than 10% of all jobs are tied to industry."

Consumer purchases of houses and cars no longer warrant such optimism.

 
As to houses, the data is ambiguous. Housing permits were distorted last spring by the expiration of a NYC program, which when seasonally adjusted, added about 15% to those months' numbers.  Take out NY, or take out multifamily units (since NYC housing is almost exclusively multi-unit), and the trend is still upward:
 
 
But at least most of those NYC permits have now translated into actual housing starts - which is the actual, realized housing impact on the economy - and those have done distinctly sideways, at least:
 
 
As to cars, when I wrote in October, over 18 million vehicles on an annualized basis had been sold in September, a feat rarely accomplished, as I showed with the below graph which subtracted 18 million from the number to depict how rare a report in excess of that rate was:
 
 
But with yesterday's report, we have now had 3 months in a row which have come in below 17.5 million annualized units (h/t Calculated Risk):
 
 
In the past, vehicle sales have plateaued during expansions, with wobbles of about 1 million or so.  A decline of about 2 million vehicles from the expansion peak has been consistent with the onset of a recession:
 
 
So the last 3 months' numbers are consistent with an ongoing expansion, but they are also *consistent with* a slow waning of data as the economy slips towards recession, perhaps as early as the 3rd quarter of this year.
 

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