Dave Altig: Calm down lads
As the second GDP data rolled in earlier this week and as I scanned my favourite econ-blogs for coverage and opinion I was perhaps infected by the bearish flu. Dave Altig from Macroblog also did some blog scanning and he prompts us scaremongers to calm down, at least just a bit.
'Wait a minute. Aren't we going just a little bit overboard here? After all, we are talking about 2-1/2 percent growth hot on the heels of 5 percent plus.'
Ok, point taken ... On that note I also happy that I was not explicitly put in the same boat as Roubini who is building up for a huge 'I TOLD YOU SO.' I don't share the most pessimistic views but I still think that the dynamics of the US economy are a bit worrying and I think Roubini might actually be right in his evocation of the three bears, at least as a theoretical explanation. Specifically, the falling consumption paired with the cooling house market is one to watch but then again, this was always going to happen I guess. Dave has the important point here I think ...
'But there is nothing new about this. For some time, the only question has been whether things would slow easy or slow hard'
Will it be a hard or soft landing for the US economy? As also reported by Nouriel (and cited by Dave) even investment in non-residential structures is falling which seems to vindicate the notion of a sustained down-turn (i.e. not only the housing sector (residential structures) is cooling off). But all this depends on so many things and most importantly will be Bernanke's ability to hit the brakes with the markets' concurrence. What is in it for the US economy then? Surely a bumpy ride, and that is all I am prepared to say at this juncture.