The United States housing market is displaying similarities to the prelude of the 2006-2007 financial crisis, with home valuations reaching levels last seen before the previous crash, according to Finbold [0f8a6a5f]. Home prices are now overvalued by 20% on rent and 26% on a homeowner basis, increasing four times in four years. The annual income required to purchase a median-value house exceeds the median household income by a record $40,000, indicating extreme unaffordability [0f8a6a5f].
In addition to the concerns about the housing market, several indicators, including the United States Leading Economic Index (LEI) plummeting by 14.7% and the US Treasury yield curve, suggest a possible recession in the second half of 2024 [0f8a6a5f]. The LEI, which historically signals the onset of recessions over the past 65 years, is currently at 101.20, a steep fall from its recent peak. Other recession indicators, such as spikes in permanent job losses, also point to a potential economic downturn [7cf50047]. The decline in the LEI and other indicators highlights the uncertainty and the need for a cautious approach [7cf50047].
The Federal Reserve's monetary policy on interest rate cuts will be crucial in influencing the direction of a possible recession [0f8a6a5f]. The US think tank's leading economic index for India rose by 1.2% in May 2024 to 158.8, and by 2.9% over the six-month period from November 2023 to May 2024. The LEI provides an early indication of significant turning points in the business cycle and where the economy is heading in the near term, whereas the CEI offers an indication of the current state of the economy. The eight components of the LEI for India are interest rate spread, BSE: index: monthly average: SENSEX, REER: 40 currencies, M3: bank credit to commercial sector, merchandise exports, cargo handled, industrial production of capital goods, and India PMI: services business activity. The three components of the CEI for India are industrial production, total imports and vehicle sales, and passenger vehicles [0878a3e8].