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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
GDP Contributions from BEA chart by Mish
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
PCE Components, chart by Mish
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.
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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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Image and article originally from mishtalk.com. Read the original article here.