I am confused. I just went to a presentation given by the Chief Investment Officer of Wells Capital Management (the asset mgmt division of Wells Fargo Bank). He showed charts and discussed that housing and autos only represent 9% of the total US GDP. And while that 9% of the economy has been in serious decline, the remaining 81% of the economy is going gangbusters! See these charts and his comentary (James Paulsen) in his Nov 2006 newsletter at
He said the press keeps talking about all the risks to the economy and how there is a sentiment out there of a “wall of worry”, but in the mean time the stock market has been doing well, the economy is doing well, profits continue to do well, incomes continue to do well etc etc.
The other interesting thing he said is that there are about 20 ways to calculate the savings rate of Americans and the one that gets bandied about in the press is, in his opinion, just about the worst way to calculate it…and if you look at other calculations that Americans are not in negative savings territory at all. Anyway that is a sidetrack to the point about the general economy and how much the housing market represents….but as said already…time will tell…
