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ONE INDICATOR HAS PREDICTED EVERY RECESSION SINCE 1960

Aruba, March 19, 2018 - This One Indicator Has Predicted Every Recession Since 1960—and It's Flashing a Warning

The government reported on Friday that the number of home construction projects that broke ground last month fell 7% versus the prior month. 
The report is raising fears that the economy might not be accelerating as much as other economic indicators show.
 
Why should investors care about a drop in housing starts, if gross domestic product and jobs are all growing at a healthy clip?
 
There are three reasons:
 
First, housing — and all of the ancillary spending associated with the purchase of a home, including renovation and remodeling costs and utilities — is a huge part of the economy. It represents roughly one-sixth of total U.S. GDP.
 
Moreover, “housing starts are a terrific leading indicator of the economy,” says Terri Spath, chief investment officer for Sierra Investment Management. That’s partly because it can take several months for homebuilders to construct a new property. And homebuilders are reluctant to break ground on new projects if they fear the economy may slump later in the year.
 
Then there’s a third issue. “It’s a reflection of consumer confidence,” says Sam Stovall, chief investment strategist for the research firm CFRA. “Who wants to engage in the biggest investment of their life — buying a house — if they’re worried about losing their job?”
 
In fact, Stovall looked at the historic data and found that every recession since 1960 has been preceded by a double-digit decline in housing starts.
 
“That’s why housing starts are so important,” he says.
 
So Should Investors Start to Worry?
Not just yet. Stovall found that in the months leading up to past recessions since 1960, the average year-over-year drop in housing starts was roughly 25%. The February data released on Friday shows far more modest declines — down 7% from the month prior, and 4% from a year earlier.
 
 

By orbitalnets.com