Sunday, January 6, 2008

US Reccession Looming???

Be Careful, Guys. Just penning some thoughts.

a) US Labour Data are not favourable
* US unemployment rose from 4.7% to 5.0%
* Non-farm Payroll (New jobs creation) only 18,000 against expectation of 75,000 and last month of 115,000
* During the festive season of December, Unemployment rose and job creation dropped. What do you think will happen in January? More layoffs after the season?

b) Home prices falling in US
* Home Prices falling, Credit Defaults. Sub-prime crisis
* Consumer less money to spend

c) Oil Prices rose above psychological barrier of $100/barrel
* It is Winter now, February is known to be the coldest time of Winter. More oil is expected to be used? This winter is seemingly colder than the last with more reports of snowstorms than previous.

In 2000, the technological bubble only accounts for 13% of the US GDP and it resulted in a recession. In 2008, we are talking about the spending capabilities of the American consumers, which accounts for 72% of the US GDP.

Can China and India help pull US out? The Chinese consumer spent $1 trillion in 2006, The Indians spent $650 billion. Americans spent $9.5 trillion. A 10% fall in American spending need to be fed by nearly 95% increase spendings by the Chinese and 130% by the Indians spendings.

Anyway... "They are only indicators!" "No one knows what will happens tomorrow"... Its your call..."Its too early to say anything concrete."

2 comments:

Anto said...

It's on the way. Just make sure your one of the lucky one's. Stock up on physical gold and silver. Convert your useless paper currency into assets that will be usefull when everything heads downhill. Think about the essentials: food, water and shelter. If you have thought about these things then you are miles ahead of many other people.

Khiat Han Hwee Adrian said...

US could probably be already in a recession. They will not admit it until it is shown to be the case.

The uncertainty should continue for the next half year.

Take this chance to accumulate more funds and look for opportunity in the next few months.