We're in the midst of feeling a very offsetting uplift.
(excerpt from
Contrary Investor):
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We'll leave you with an excerpt from a recent (November '06) Fortune interview with Treasury Secy. Paulson. And we'll also leave you with a question to ponder. Is this personal conjecture on the part of Paulson, or is this simply implicit policy at this point?
Aren't you concerned that GDP growth dropped to 1.6% in the latest quarter? That's kind of anemic, and we've seen a downturn in the housing market. Convince us we're not going to have a recession next year.
"I can't convince you. But as I looked at the third quarter, I felt good because I saw a major correction in the housing market, and I knew that was going to take more than one percentage point off GDP. And then I'm looking at the rest of the economy - strong corporate profits and investment, good growth outside the U.S., strength in the construction sector away from housing, and then an equity market that has gone up and added $1 trillion in value.
I know how much people care about housing. But I would be quite hopeful that through 401(k) plans, pension plans, and elsewhere that the average American is feeling an uplift from the appreciation of the equity market that would be very offsetting to any potential decline in housing."