Monday, January 28, 2008

New Home Sales: Cliff Diving

by Calculated Risk on 1/28/2008 11:22:00 AM

New Home Sales and RecessionsClick on graph for larger image.

This graph shows New Home Sales vs. recessions for the last 45 years. New Home sales were falling prior to every recession, with the exception of the business investment led recession of 2001.

Note that the escalation of the Vietnam War in the '60s kept the economy out of recession, even though New Home sales were falling.

This is what we call Cliff Diving!

And this shows why so many economists are concerned about a possible consumer led recession - possibly starting in December (as shown on graph).