Three Indicators of the US Economic Bottom to Watch For

Look out for the following:

US savings rate reaches 8% of Disposable Income – currently its about 2.6%

US household debt service as a percentage of disposable income falls to less than 11% (currently its about 14%)

US housing stock falls to 8 or fewer months supply – today its about 17 months – you need to watch the figure that includes everything, including foreclosed assets, etc.

Two of them are all about getting the US consumer cashed back up.  There will considerable be pain for the US while people save/pay down debt.

There are no guarantees but these indicators have featured at the early stages of the last several recoveries.

Perhaps you might want to set a Google alert or another means to monitor where these indicators are travelling periodically.

Cheers

Tomthemoneyman

Chinese Credit Cards

The Chinese owned 1.6bn credit cards at 31 March 2008.  That is 5 for every person in the USA.  There are also 2.2bn bank accounts in China.  That’s 7x the number of people in the USA.  The credit cards are only used to about 10% of their limits, so there is plenty of available credit.  The opportunity to sell things to the Chinese has definitely arrived.  Lets just hope they don’t overdose on credit and get their economy into difficulty.  At least the Chinese have seen the problems that can arise when consumers constantly spend more than they earn and when lenders start making loans people can never repay.

Cheers

Tom the Moneyman