_Getting Graphic is a semi-sort-of-irregular collection of our favorite BIG real estate-related chart(s)._

Here’s a great summary of the state of the housing market, and its interaction with the consumer.

_Bear markets begin when growth in real consumer spending peaks and beings to slow. I think I made the case above that consumer spending is going to face a real uphill battle as cash-out financing slows down, higher energy costs don’t go away, higher interest rates translate into higher mortgage and credit card payments on top of legislation requiring higher minimum payments on credit card balances._

_Slower consumer spending and recessions happen “on the margin.” By that I mean that consumer spending does not stop. It just slows down and maybe even stops growing on a year over year basis. That pushes profits down, which means company after company starts having earnings misses and stocks start to drop._

[Click here for full article [Goldseek]](http://news.goldseek.com/MillenniumWaveAdvisors/1142784060.php).

Source: Goldseek

One Comment

  1. Larry Littlefield March 20, 2006 at 9:04 am

    I agree, and am very skittish about our debt driven economy. More skittish than in 1992, when things were bad but clearly had an upside. Now things are good, but without a solid foundation.

    Stocks may be less overpriced than owner-occupied real estate, but I’m still not happy about what they’re charging. They’re charging 18 times current earnings, or a 5.6% return, and projecting 15 times future earnings, or a 6.7% return in the future. That would be good enough for me. Except that current earnings are inflated by the ability of business to pay labor less and yet have labor spend more, borrowing the difference. How long can this go on?

    I can’t help but think business profits have to go down: either because prices will have to fall to what people can afford to pay without debt (deflation) or wages will have to rise so that people can keep spending without debt (inflation). Neither scenario is good for stocks — both seem more and more likely than the current ideal situation going forward.

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