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]. Recent indicators also suggest a dramatic decline in housing buying conditions, reaching levels not seen in over four decades [6dd9083f]. Data from the research platform Game of Trades revealed that current conditions mirror economic downturns observed in 1974 and 1981, which preceded severe recessions [6dd9083f]. The substantial and rapid decrease in buying conditions suggests a notable loss of consumer confidence in the housing market, often a leading indicator for broader economic trends [6dd9083f]. The current collapse may be linked to prevailing interest rate hikes aimed at curbing inflation [6dd9083f].
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 and rising unemployment rates, also point to a potential economic downturn [7cf50047] [6dd9083f]. The decline in the LEI and other indicators highlights the uncertainty and the need for a cautious approach [7cf50047]. Attention is focused on the Federal Reserve regarding its next monetary policy decision, as more analysts maintain that the U.S. might enter a recession in the second half of 2024 [6dd9083f]. The Federal Reserve's monetary policy on interest rate cuts will be crucial in influencing the direction of a possible recession [0f8a6a5f].
However, recent data from The Conference Board indicates a mixed economic outlook. The LEI fell by 0.4% in October 2024, continuing a downward trend for almost three years, although economist Stephanie Guichard noted that the declines are slowing down, suggesting less severe headwinds for economic growth [9523fb15]. Despite these concerns, Sam Stovall from CFRA Research expects real GDP growth of 2.9% in 2024 and 2.3% in 2025, while the stock market, particularly the S&P 500, is hitting record highs, indicating positive economic trends [9523fb15]. Mark Zandi from Moody’s Analytics highlights a strong job market with low unemployment and jobless claims at a six-month low, which contradicts recession fears [9523fb15].
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].