Housing Impact on GDP

Its apparent from yesteday’s Earnings release that the impact of Housing is working its way into the earnings picture. So far, the impact has been very specific, and limited to Retail (Home Depot, Circuit City), a few Transports (Yellow Roadway, UPS), and of course the Home Builders. Thus far, Financials have contained the impact of sub-prime, but are seeing originations and loan volumes fall.

Here is a quick round up of where else Housing is impacting the economy, via RGE:

Gross Domestic Product: First Quarter 2007 (Advance)   
Bureau of Economic Analysis, Apr 27, 2007
http://www.bea.gov/newsreleases/national/gdp/2007/pdf/gdp107a.pdf

Declines in Housing and Exports Depress Growth   
Dean Baker, Apr 27, 2007

Center for Economic and Policy Research,
http://www.cepr.net/index.php?option=com_content&task=view&id=1152&Itemid=138

1st Quarter Advance GDP
First Trust Advisors
4/27/2007
http://www.ftportfolios.com/Retail//Research/ViewResearchArticle.aspx?ID=315


”Advance” Report Puts Real GDP Growth at 1.3%

David H. Resler
Nomura Economic Research, Apr 27, 2007
http://investinginbonds.com/assets/files/gdp04_27_2007.pdf

Slow GDP Boat to Faster Inflation
Michael Gregory
BMO Capital Markets Economics, , Apr 27, 2007
http://www.bmonesbittburns.com/economics/econofacts/20070427b/econofacts.pdf

US Q1 growth likely to be revised to 0.7%

Already in “growth recession” range, Q2 started worse than Q1.
Nouriel Roubini
RGE, May 10, 2007
http://www.rgemonitor.com/blog/roubini/193796


U.S. Economic Growth Is Slowest In 4 Years Amid Housing Slump

Jeff Bater
Wall Street Journal, April 27, 2007
http://online.wsj.com/article/SB117767443639284710.html

GDP Growth Update
Kash Mansori
The Street Light, April 27, 2007
http://streetlightblog.blogspot.com/2007/04/gdp-growth-update.html

GDP = 1.3%
Barry Ritholtz,
The Big Picture, April 27, 2007
http://bigpicture.typepad.com/comments/2007/04/gdp_13.html

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What's been said:

Discussions found on the web:
  1. michael Schumacher commented on May 16

    It’s apparent to the people who actually read through and interpret data and articles in there own way. A post asks why can’t it be said what is really going on with inflation……because as BR knows it is career suicide to go against the normal channels of media and it’s spin on any negative news that does’nt support the current administration’s agenda.

    Whether we like it or not (or want to admit it) our gov’t is engaged in one of the largest frauds and financial chicanery that we’ve ever been witness to. Remember what happned in Hungary last year???

    It will most likely never be exposed as the fraud it is however if it were it would make watergate look like a children’s picnic.

    Remember inflation is not a problem if you do not drive anywhere or eat anything……just ask our gov’t they’ll tell you.

    Sheeple in full effect

    Ciao
    MS

  2. wunsacon commented on May 16

    This fraud has been ongoing. So, although I consider the current adminstration to be far (far, far) worse than its predecessor, we need a mechanism to help us break the two-party duopoly. Indeed, the methodology of “choosing the lesser of two evils” does not guarantee that the *baseline does not get worse*!

    We need competition in the political marketplace. Instant run-off voting would eliminate the concern — “I don’t want to waste my vote” — people have for voting for 3rd party candidates.

    We should also have redistricting done by algorithms that don’t attempt to control the political makeup of those districts. (Ahnuld said he wanted to do this. I wish he had turned this into one of his propositions. I haven’t read anything on it in years.)

    Without systemic changes, we seem to be going from bad to worse.

  3. michael Schumacher commented on May 16

    bad to worse?? no that’s when Guiliani starts campaigning in earnest so we can re-live 9/11 at each and every campaign stop.

    And as far as the waste of a vote thing… Clinton got elected because people “wasted” votes on Perot. I shudder to think what would have happened with a two term Bush #1……although….nevermind….LOL

    Ciao
    MS

  4. Curt Smith commented on May 16

    RE a recent small comment you made: the Chinese yuan will be floated soon. I’ve found commentary on Chinese news sites announcing this as a high likelyhood.

    Any thoughts on what this means for the Chinese ETFS: FXI / EEM that largely hold ADRs for HK listed Chinese stocks?

    Several forces are in play Goldman is shorting Chinese stocks and ETFs, the Chinese banks are buying stocks and rumored to be the cause of the FXI jumping last Friday. Won’t floating the yuan cause the value of the FXI to go up too?

    Yet the more it goes up the more puts and shorts are bought.

    It’s a mess and where might I got (besides here) go to discuss and learn what the possible outcomes are?

    tnx curt

  5. Fred commented on May 16

    I won’t even dignfy the conspiratorial, Michael Moore’esque drivel above…

    On to more important things…

    Everyone knows the economy is slowing down from the overheated housing market…period. No news or edge there (except that earnings have not cratered as predicted).

    What IS more important (imho) is the state of capital expenditures going FORWARD. We all know corporations are flush with cash. We’re now about to see a (surprise) pick up in capex from the more important enterprise side of the equation.

    Here are comments in a piece from Seeking Alpha:

    “Nasdaq should be doing better, not worse, as I think CDWC’s earnings and outlook mark a real change in tech spending. A survey done by CDW Corp. (CDWC) also indicates that although Vista may be off to a slow start, much of that is due to the late roll-out which has backed up IT testing of the new system. “Everything that we’re hearing from our customers is that they’re going to be patient about this and they’re looking more in the third or fourth quarter this year than the first or second,” CDW CEO Edwardson said.”

    This will be the short killer.

  6. rex commented on May 16

    MS: what in the world does this mean:

    “it is career suicide to go against the normal channels of media and it’s spin on any negative news that does’nt support the current administration’s agenda.”

    Hasn’t Barry made his career by going against the grain on “normal channels of media”

  7. REW commented on May 16

    BR wrote:
    “Thus far, Financials have contained the impact of sub-prime…”

    Most of you on this blog are too young to remember but it was only a few weeks ago that the sub-prime meltdown was signaling the onset of the end of days. It was a long, dark period in our history, but we pulled together as a nation, and managed to escape extinction.

    Hopefully, we are wiser for having gone through this experience and we’ll be better prepared the next time a phantom calamity raises its ugly head.

  8. Neal commented on May 17

    REW, the spigot of wealth from home equity has just turned off and the big hill of mortgage resets has just been started-you might be surprised what 3rd and 4th quarter look like. Hopefully Vista and capex will save the world, butI doubt it.

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