I read quite a substantial amount of news on the financial markets and the latest information makes for a pessimistic view.
Are we about to enter a recession?
Well, quite possibly yes as the signs have already started in America. Now if there is trouble in America we tend to get the after affects. Not everyone thinks it’s all doom and gloom but more likely a slow down.
By the end of August UK inflation as measured by the Governments favoured index, the CPI (Consumer Price Index) has risen from 1.1% two years a go to a ten year high of 2.5%. The RPI (Retail Price Index) which is used to gauge wages is even higher at 3.7%.
Commodity prices (sugar, orange juice etc) will start to rise and people will demand higher wages to compensate for the higher cost of living. Because employers have to pay higher wages, they have to charge more which has a spiral affect.
The US housing market also seems to be collapsing. Last month was terrible as the “housing bubble” exploded. There are too many unsold new homes with very low affordability so US builders had to slash prices in order to sell houses. Not only this but the number of repossessions has also increased.
I could go on and on but this kind of talk can get very boring.
The bottom line is, the signs for a recession are definitely there and have already started across the pond so watch out!
James Alliss.
[…] Back near the end of 2006 I wrote two articles. One was titled “Are We Heading For A Recession” and can be found here. The other was “The UK Housing Market Is About To Crash” and can that article can be found here. […]