by Calculated Risk on 10/31/2006 05:11:00 PM

Northern Trust's Paul Kasriel writes: Housing Recession Isn't Spreading? Kasriel argues that we may already be seeing spillover from the housing recession into the general economy. A few excerpts:

Click on graph for larger image.
Graphs and text from Northern Trust.

"For Q3:2006, the year-over-year change in real consumption was 2.8%, down a full percentage point from its reading of Q3:2005 and the lowest year-over-year growth since the first half of 2003. Perhaps it has nothing to do with the housing recession, but the data say that growth in consumer spending, although not yet collapsing, certainly is decelerating."

"Now, direct your eyes to Chart 2, which shows the year-over-year percent change in real expenditures of business equipment and software. In Q3:2006, the year-over-year change was 5.7%, down from 9.3% in Q3:2005 and the slowest year-over-year growth since Q3:2003. Again, although there is no recession in business capital spending, yet, the data show very clearly that the growth in spending on business equipment and software is decidedly moderating."

Please see the Northern Trust commentary for more.