Re: economic news

[Eugene Coyle <eugenecoyle@xxxxxxx>]

Jim Devine wrote  in part:

>
>
> The second scenario involves more severe rises in unemployment and then
> sudden declines in spending on housing and other consumer durable,
> _despite_ the Fed's rate cuts. The first scenario suggests that the
> continued purchases of houses and autos and the like will spread to sector
> I, raising profitability there and boosting business fixed investment,
> which would discourage further increases in the unemployment rate.
>
>

I don't think that if the consumers bubble (or bumble) along, spending on
houses and autos, that it will boost business fixed investment.  The capacity
utilization rate -- even while consumers persist in spending -- is going down,
not up.

    And my own view is that consumers will cut back, rather than persist in
spending.  The deals being offered on new car purchases seem to be getting to
the desperate level.  Zero percent interest rates, big cash givebacks, etc.

Gene Coyle