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Wednesday, October 4, 2017

An impending US recession?

Total car sales tend to lead the overall economic cycle at the peak (see the chart below; double-click to enlarge).  There are reasons proffered for this current downshift: people are holding on to their cars longer; millennials aren't buying cars.  Yet varying explanations for falling car sales are produced every cycle.  As you can see from the chart, it's a big decline.

Add in the rising cash rate from the Fed; an impending reversal of QE (quantitative easing) to QT (quantitative tightening) as the Fed starts to sell down its bloated holdings of long term-debt bought to provide stimulus over the last 7 years; and consumer weariness, and it's looks quite likely there will be a recession.  When?  Can't tell yet.  But it does raise some question marks over the boom on Wall Street. 


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