‘The Most Important Chart In Macro’: Cyclical Components Of GDP

Authored by Mike Shedlock via MishTalk.com,

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.

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

— Eric Basmajian (@EPBResearch) July 6, 2022

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

Also note Existing Home Sales Skid Another 3.4 Percent in May, Down Fourth Mont

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