ECRI was down again on Friday. ISM services was down and, of course, the jobs number was poor. However, the jobs number, like most government numbers, is so mangled I don’t think it means anything anymore. For example, the birth-death model injected 207K jobs based on GDP growth. The problem is GDP growth is probably overstated due to understated inflation (those hedonic and substitution adjustments). So these adjustments interact and render the end result pretty meaningless, IMO.

What was pretty clear is that cracks are showing in some of the housing bubble locations, such as Las Vegas. Mortgage originations were down despite a continuing drop in mortgage rates. Layoff announcements were way up and the Big Three automakers are not doing well. If there is a slowdown in housing, as I’ve said before, it really is over. The grand experiment in managing the economy will move to its next stage. Will Al lower rates to reflate the housing bubble and risk runaway commodity inflation as a side-effect? Who knows…

Runaway debt growth, government and trade deficits, where does it end? Soon, please.