Monthly Building Materials Sales Per Capita

The shaded area represents our last economic contraction. Our last consumer recession was July, 1990 to March, 1991. This data doesn't go back that far.

Here is some data covering our last consumer recession. Please note the large drop off in per capita sales of building materials during that period (the numbers are not adjusted for inflation, or they'd look even worse).



So here's the question of the day. Just how bad is the aftermath of our current housing bubble going to be? Are we going to slowly slide down and muddle our way through this or are we going to panic at some point?

Economic panic is uncalled for
There are a number of things that could keep us awake at night, and several of these are in the realm of economics.

These include the dismal housing market, the subprime-mortgage-lending crisis, rising delinquencies and foreclosures, and the recent nerve-shattering roller coaster ride in the stock market

Obviously not all is well in the economy.

Despite all the bad news, let me assure you that the American economy is not going down the tubes. It remains the largest and most important economy in the world, ahead of Japan, Germany and China. The economy will continue to expand modestly in 2007, and most analysts say they believe that it will not go into a recession despite the serious challenges it faces.

I don't know about you, but when I'm told not to panic I tend to calmly move towards the exits.

Further, you've got to love the wording on what the analysts are saying. He had a choice. He could have said most analysts believe. Instead, he chose to say most analysts say they believe. Why do you suppose that is? The distinction is rather subtle. As one who believes that most analysts have a vested interest in saying one thing while thinking another, I'm rather skeptical of what analysts have to say. However, I'd love to know what they really think. What were most analysts saying at the height of the dotcom bubble? What were they actually thinking?

Here's a look. Note the difference between the "public assessment" and the "internal assessment." So please forgive me if I don't jump up and down with excitement over what the analysts have to say.

Source Data:
U.S. Census Bureau: Monthly Retail Sales
BLS: Consumer Price Indexes (CPI)
St. Louis Fed: Population Data
National Bureau of Economic Research, Inc.
Annual Benchmark Report for Retail Trade: A detailed summary of Retail Sales, Purchases, Accounts Receivable, and Inventories January 1987 Through December 1996