Canada's Housing Bubble

The leading index that catches even more attention is the ECRI Leading Indicators.

The ECRI weekly leading indicators have dropped to minus 7.7%. There has been no case since its existence when a recession didn't take place if this indicator fell to minus 10%. This doesn't mean that it has to fall that low, a recession is still very likely if it even gets close. Falling below zero and staying in that range for any period of time also signals a recession. In the 2007, the recession began three months after this indicator turned negative.

That was last week's news. Today the ECRI Leading Indicators dropped to negative 8.3%, a 44-week low and slightly below the level it was when the Great Recession started.

Other leading indicators are building permits and housing starts, both of which collapsed last month. Mortgage applications have dropped 40% to their lowest levels since 1997.

Housing starts fell 10 percent to a 593,000 annual rate last month, the lowest level this year, from a revised 659,000 pace in April that was less than previously estimated, Commerce Department figures showed today in Washington. Building permits, a sign of future construction, unexpectedly declined to a one- year low. Single-family home starts suffered the biggest drop since 1991.

The most traditional, historical leading indicator has been the monetary supply. So let's look at the largest monetary measurement still being used - the MZM.

The June employment numbers showed a decline in hourly earnings and average workweek, both considered leading indicators.
Not surprisingly, consumer expectations also fell along with their paychecks.

Just 23 percent now say the economy is getting better, down from 33 percent in May...

Meanwhile the double-dip denials are getting louder and more hysterical. In fact, the economists of the world are nearly universal in denying the possibility of a double-dip at the moment. Even bears such as Roubini and Rogoff say that it won't happen.
I find that strange when so many indicators are rolling over and nearing levels that virtually assure a double-dip. Either these indicators are wrong, or the collective body of economists are about to lose what little credibility they have left.