To understand where the economy is headed, watch the cyclical components of GDP.
Cyclical components of GDP, image from Tweet below
Here's the most important chart in macro.— Eric Basmajian (@EPBResearch) July 6, 2022
Explains the surge in growth, the overwhelming of supply chains, and the peak in the cycle.
If the black line goes back towards the red line, the pain will be excruciating. pic.twitter.com/3J7lH1xiWK
Video Explanation of Cyclicals Importance
Cyclicals including housing and durable goods only constitute ten to fifteen percent of GDP, but the swings account for variations between growth and recession according to Eric Basmajian at EPB Macro.
Housing Bust Underway
Basmajian's theme ties in with the housing bust now underway.
For discussion please see Expect Huge Negative Revisions to New Home Sales as Sales Crash and Orders Cancelled
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