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Thursday, March 29, 2007

Dallas Fed: Comparing 2001 to 2006

by Calculated Risk on 3/29/2007 05:00:00 PM

Evan Koenig at the Dallas Fed writes: Vive la Différence (hat tip Mark Thoma)

"There are several disturbing similarities between the U.S. economy's recent behavior and its behavior in 2000–01, but also some reassuring differences."
See the above links for the details.

I'd like to expand the periods for Koenig's chart 4 and 5.

Click on graph for larger image.

The first graph (compare to Koenig's chart 4) shows Koenig's method for projecting changes in residential investment is reasonable. There is no question that residential investment will fall much further, and will decline in every quarter in 2007.

The second graph (compare to Koenig's graph 5) compares changes in new orders for durable goods with changes in manufacturing employment. Once again, Koenig's approach is reasonable.

Based on this analysis, Koenig is expecting the net loss of 53K manufacturing jobs per month over the next 6 months. This is in addition to the residential construction job losses that I'm projecting will be in 75K+ per month range.

No wonder Koenig concludes:
"The big question is whether the drags from housing and manufacturing will let up before weakness there begins spilling over to the rest of the economy."