(US) Recession Ahead?

What a bad way to end the year. Just read this article in Forbes website (source : http://www.forbes.com/home/opinions/2007/12/26/croesus-chronicles-recession-oped-cz_rl_1227croesus.html?partner=yahoofp) that suggested signs of recession (that I was also talking about in earlier posts).

Though recession in the US is not certain in 2008, but signs are starting to get clearer. The credit crisis in 2007 tipped the scale. The leading home price index is at a six-year low, financial services are at a 13-year low, while non-financial services are at a 56-month low, according to figures kept by ECRI.

The major drivers indicating recession includes:
(1) Job Figures.
Job creation have softened to under 100,000 new jobs last month. Any two months in a row of negative job growth--meaning there were job losses--is usually the key indicator that a recession is around the corner.

(2) Industrial Manufacturing Figures
Though manufacturing in the States are still positive due to weak US$, signs have shown that output is well below June 07's high.

(3) Housing Downturn
Home prices have plummet and expected to continue. New home prices have fallen (by 43% for new single-family homes), resale has seen lesser demand, more seizure taking place, etc. is down and expected to fall lower. This is further attributed by the inability to borrow vast amounts of money for home purchase.

(4) Other Factors
~ Dropping Interest rates
~ Retail sales have soften
~ Flat Investor expectations


Don't wait for the relevent government agencies tell you that we're in one (recession), because they ordinarily wait until economic activity has fallen for six months. By then, it's too late--the stock market will have sagged.

With large emerging markets such as China and India in the recent years, the citizens of these countries have become more affluence thus buying has been on an increase. This will help support global market from US' recession. Many countries have slowly divert their major trading partners, from the West to Asia. This means a recession in the US may not affect other countries as much as before.

Last but not least, HAPPY NEW YEAR to all and hope your finances sees you with great returns in 2008.