Investment and Recessions

A long, long, long time ago - almost twelve years ago - I wrote Investment and Recessions , explaining the usefulness of New Home Sales as a leading indicator. Here are some updated graphs. My view is new home sales and housing starts are two of the best leading indicators for the economy (but not always). The first graph shows the change in real GDP and Private Fixed Investment over the preceding four quarters, shaded areas are recessions. (Source: BEA) Click on graph for larger image. A couple of observations: 1) Since 1948, private fixed investment has fallen during every economic......(read more)

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