1 of 2 The Institute for Trend Research – Projecting When Economic

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TEe 109
November 2003

“Projecting When Economic
Cycles Change”

Presented By:

The Institute for Trend Research
alan@ecotrends.org
www.ecotrends.org

ITR

US, New York & the Mid–Atlantic Annual GSP Growth Rate

9 ——-,

shapeType75fBehindDocument1pWrapPolygonVertices8;34;(21500,0);(21432,0);(21432,375);(21174,375);(21174,4801);(15829,4801);(15829,3286);(15178,3286);(15178,4801);(10617,4801);(10617,9228);(5928,9228);(5928,4801);(1431,4801);(1431,375);(0,375);(0,21500);(390,21500);(390,12772);(7098,12772);(7098,17198);(7818,17198);(7818,18588);(8272,18588);(8272,17198);(9121,17198);(9121,12772);(20780,12772);(20780,17198);(21367,17198);(21367,3919);(21432,3919);(21432,4551);(21500,4551)posrelh0posrelv0pib

6~r–—––~–r———–————–—~r–––—-–—~

3 I ~ \‘\ I —b–¥J – \l I

o I ‘” \.Vf ~

–3+–——-———~nr—–————-——-–—–—~

~+–-._,–.__r_,--.__r–r_,_~–-r_._~–._.__.–._,,_.~

1984

1986

1988

1990
–U.S.

1992 1994

—New York

1996 1998

– • Mid–Atlantic

2000

2002

ITR

Unemployment Rates

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

II U.S. III New York

2

/

3

			12MMT
				32
				28
				24
				20
				16
				12
			$9.248	8
				4
				0
				–4
				·8
’02		‘03	‘04

ITR

Company M
Data Trends

‘00

’01

-2+––—-~—-~–-~_r–—_+-—_+—–-~—-~-–—––r_—__+

4

/

3MMT
8

7

6

5

4

3

2

o

–1

–12MMT

														5
ITR		US Industrial Production to Gross Domestic Product
					3112 Rates–of–Change
116														116
112														112
108														108
104														104
100														100
96														96
92					–GDP									92
					–USIP
88														88
‘80	‘82	’84	‘86	’88	‘90	’92	’94	’96	’98	‘00	‘02	‘04

‘96

‘97

’98

‘99

shapeType75fBehindDocument1pWrapPolygonVertices8;10;(3809,0);(0,0);(0,20598);(8216,20598);(8216,21500);(21499,21500);(21499,10598);(5775,10598);(5775,11895);(3809,11895)posrelh0posrelv0pib

ITR

GOODS & SERVICES AS A PERCENT OF GDP (real)

Services

Goods

40~~~~~~~~~~~~~~~~~~~~~rl

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

/

RA TE-OF-CHANGE

ITR 7

ACTUAL MONTHLY DATA AS OF 10103
ACTUAL MONTHLY DATA AS OF 910102

– 1112

3–MOS MOVING TOTAL (3MMT) AS OF 10103
3–MOS MOVING TOTAL (3MMT) AS OF 10/02

– 3112

ANNUAL MOVING TOTAL (12MMT) AS OF 10/03

AL MOVING TOTAL (12MMT) AS OF 10102

– 12112

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6

• “U~;‘

8

I
I
I
I
I

I
I

ITR

US Total Industrial Production
12112 Rate–of-Change

130

shapeType75fBehindDocument1pWrapPolygonVertices8;14;(21202,0);(0,0);(0,21496);(590,21496);(590,10632);(1702,10632);(1702,13491);(2517,13491);(2517,10632);(3336,10632);(3336,14747);(21500,14747);(21500,11317);(21202,11317)posrelh0posrelv0pib

130

120

110

100 II • 1/ ‘I” \I \ I—-\–A I – “H \ 1′–+100

90

80

70:‘:~~:,~~’–‘-‘-–‘–‘–‘-‘–‘-‘–‘-‘-‘–‘-‘–––––

1950 1955 -,-,-1– 70

1960 1965 1970 1975 1980 1985 1990

1995 2000 2005

120

110

90

80

/

Isource: ITR’s EcoTrendsl

ITR

US Total Industrial Production
12/12 Rate–of–Change

130

120

110

100

90

80

ro ro

1900 1905 1910 1915 1920 1925 1930 1935 1940 1945 1950

Isource: ITR‘s EcoTrendsl

130

120

110

100

90

80

9

shapeType75fBehindDocument1pWrapPolygonVertices8;4;(21462,0);(0,0);(0,21499);(21462,21499)posrelh0posrelv0pib

shapeType75fBehindDocument1pWrapPolygonVertices8;4;(21486,0);(0,0);(0,21500);(21486,21500)posrelh0posrelv0pib

shapeType75fBehindDocument1pWrapPolygonVertices8;4;(21488,0);(0,0);(0,21400);(21488,21400)posrelh0posrelv0pib

ITR

10

US Industrial Production Index

Forecast Through December 2003

12/12 Rate-of-Change

115

115

110

110

105

105

100

100

95

Dee 1997: 105.8-

106.2

95

Dee 1998: 103.4-

104.6

90 +

Dee 1999: 102.8–

104.0

+ 90

Dee 2000: 103.6–

104.4

Dee 2001: 100.5-

101.4

85 +

Dee 2002:

96.9 –

97.8

+ 85

Dee 2003: 103.9-

104.9

80L

~80

’86

‘88

’90

’92

’94

’96

’98

‘00

‘02

‘04

ISource: ITR’s EcoTrendsl

/

–,

11

ITR

US Industrial Production Index

Forecast Through December 2004

Annual Average Index

140 I

I 140

130

t

130

120 +

t

t

120

110 t

/

.~

110

100

100

90

90

Dee 2003:

-0.4

to 0.4

80 +

“./

Dee 2004:

3.6

to 4.6

+ 80

Dee 2005:

1.0

to 2.0

Dee 2006:

2.1

to 3.3

70t::

Dee 2007:

3.5

to 51~70

60

–––,– 60

‘86

‘88

’90

’92

‘94

‘96

’98

’00

‘02

‘04

’06

’08

ISource: ITR’s EcoTrendsl

• •• ~,I~,

ITR

Company M to US Industrial Production
12112 Rates–of–Change

Sales

Index
108
107
106
105
104
103
102
101
100
99
98
97
96
95
‘02	‘03	‘04

260
240
220
200
180
160
140
120

100 I A I V – VU

80 1.0 I

60 + –Sales

40 + —US Production

20 __

o

‘97

’98

’99

‘00

’01

/

ITR

Co. L to US Industrial Production
12112 Rates–of-Change

Sales
120
115
110
105
100
95
90
85
80
‘94

–Sales

Index
112
109
106
103
100
97
94
91
88
’02	‘03	’04

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–US Production

‘95

‘96

‘97

’98

‘99

‘00

‘01

12

13

….•

•

•

•

II

•

•

ITR

“All a statesman can do is to listen to the footsteps of God as
he walks through history, and get hold of the hem of His cloak
and walk with Him a few steps of the way.”

Otto yon Bismarck

” … But most contemporary politicians or business executives
do not consider that they are walking through history. Is it
any wonder, then, that few of them make history?”

Henry Kissinger

14

/

15 I .~. ?;: ;UQ. (;~.

0/~~~(”

sy~.‘

– (

ITR

Four Phases

Expansion?

Bankrupt?

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– Phase A –Phase B

Phase C – Phase D

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2) rr+>: T
~eJlVvV

I/-U c;. ;‘ ~ ‘::;:: ~

-~ .

&–,–-‘

j/oV
f/1>

?6’6–

· .’~

ITR

Management Objectives:

Phase Late D • Recession I Early A ~ Early Recovery

16

I

I

I

I

I

/

ITR

Prepare training programs

Negotiate union contracts if possible

Develop advertising & marketing programs

Enter or Renegotiate into long-term leases

Concentrate on cost reduction programs

Look for additional vendors

Capital expenditures & acquisitions considered in
light of market-by-market potential

Management Objectives:

Phase Late A – Recovery:

Start to phase out marginal opportunities

Build inventories in the system

Continue placing capital equipment orders

Hire “top” people

Implement training programs

Add sales staff

Introduce new product lines

Begin advertising and sales promotions

Implement plans for facilities’ expansion

Update standard costs

If you haven’t
already

Early 03

17

I

I

I

I

I

I

I

I

I

I

I

I

I

I

/

ITR·

Management Objectives:

18

Phase Early B – Gr()wth~

I. Accelerate training

Continue to build inventory

Increase prices

Find the answers to “what next”

2003 – 2004

Consider outside manufacturing sources if internal resources

becoming tight

Check the process flow for possible future bottlenecks

Open distribution centers

Use improved cash flow for corporate governance.

ITR

Management Objectives:

Phase Late B Early C – Prosperity:.

1. Stay in stock

20041 and again
in 2008

2. Penetrate new OEM accounts

Develop plan for lower activity in traditional, mature markets

Begin missionary efforts into new markets

Consider taking on subcontract work if the backside of the cycle looks

recessionary

Freeze all expansion plans

Spin off undesirable operations

Stay realistic – beware linear budgets

Consider selling the business in a climate of maximum “goodwill”

19

I

20

I

ITR

Management Objectives:

I

/

Phase Late C – \Varning:

Begin work force reductions

Reduce advertising

Cut training

Weed out inferior products

Reduce inventories

2005

Avoid long-term purchase commitments – late in the price cycle

Set budget reduction goals by dept.

Encourage distributors to decrease inventory

Concentrate on cash and the balance sheet

De–Emphasize commodity products/services in anticipation of
diminishing margins

ITR

Management Objectives:

21

I

I

I

I

I

I

Phase Early D – Recession:

1. Continue force reduction

Reduce virtually all advertising

Continue to avoid long–term purchase commitments

Review all lease agreements

Increase the requirements for justification of capital equipment

Eliminate all overtime

7. Reduce overhead labor

Combine departments with like capabilities and reduce management

Select targets of opportunity where price will get the business

I

I

ITR US Industrial Production to Paper & Products Production

12112 Rates-of-Change

Index		Production
108		108
106		106
104		104
102		102
100		100
98		98
	–USIP
96		96
	– Paper Production

w W

‘90 ‘91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04

22

/

ITR

US Industrial Production to Printing Production Index
12112 Rates-of-Change

115

110

shapeType75fBehindDocument1pWrapPolygonVertices8;8;(21499,0);(0,0);(0,20858);(20717,20858);(20717,21493);(21238,21493);(21238,11390);(21499,11390)posrelh0posrelv0pib

23

105

100

95

90

–Index

–Printing

1970

1975

1980

1985

1990

1995

2000

2005

115

/

ITR

US Industrial Production Index to Foods Production
12112 Rates–of–Change

i

i

24

I

Index
120

Production
108

I

106

115

–USIP

90+– “L– –. –~F~OrOO~P~rOO~~~li~on~-–—-_,r_—-––._–—--._~96

1970

1975

1980

1985

1990

1995

2000

2005

I

ITR

US Industrial Production to Heavy Duty Truck Production
12112 Rates–of–Change

Trucks														Index
200															115
180															112
160															109
140															106
120															103
100															100
80															97
60															94
40															91
’80	’82	‘84	‘86	’88	’90	’92	’94	’96	’98	‘00	’02	‘04

2S

I

I

I

I

I

I

I

I

ITR US Industrial Production to Fabricated Metal Products Production
12/12 Rates–of–Change

115
110
105
100
95
90
85
80
1970	1975	1980
/

–USIP

		115
		110
		105
		100
		95
		90
		85
		80
2000	2005

26

27

–Fabricated Metals

76

1990

1995

1985

ITR

US Industrial Production to Plastics Materials Production
12/12 Rates-of–Change

Production
148

Index
120
115
110
105
100
95
90
85
1970		1975	1980

shapeType75fBehindDocument1pWrapPolygonVertices8;6;(21499,0);(20653,0);(20653,188);(0,188);(0,21494);(21499,21494)posrelh0posrelv0pib

–USIP

–Production

+–––‘–—‘—‘–—r–‘r-–‘–—,—-‘—‘-––r—,—,–—,–~64

1990

1985

1995

2000

2005

28

I

ITR

US Industrial Production to Equipment & Software Investment
12112 Rates–of–Change

Investment
124

I

I

I

i

88

i

/

I

Index
116

92

–USiP

–imestment

88+,––~––~—,—-,—,—,—.––.-–-.–—,–––~–~-––+82

’80 ’82 ‘84 ‘86 ‘88 ‘90 ‘92 ‘94 ‘96 ’98 ‘00 ‘02 ‘04

Index
120
115
110
105
100
95
90
85
1970	1975
	Production
		140
		130
		120
		110
		100
		90
		80
		70
2000	2005

29

ITR US Industrial Production to Communication Equipment Production
12/12 Rates-of–Change

shapeType75fBehindDocument1pWrapPolygonVertices8;8;(21497,0);(0,0);(0,20743);(4253,20743);(4253,19091);(20397,19091);(20397,21495);(21497,21495)posrelh0posrelv0pib

– Production

1980

1985

1990

1995

/

ITR

US Industrial Production to Hospital Expenditures
12/12 Rates-of–Change

Index
112

Expenditures
120

109

shapeType75fBehindDocument1pWrapPolygonVertices8;18;(20700,0);(1043,0);(1043,3378);(1410,3378);(1410,12802);(0,12802);(0,14733);(982,14733);(982,21496);(4175,21496);(4175,16784);(17689,16784);(17689,20049);(19103,20049);(19103,14733);(21500,14733);(21500,13890);(20700,13890)posrelh0posrelv0pib

106 .

103

97

—us IP

–Hospital Expenditures

94+–,-,-,—,-,-,-,-,-,,-,–,–,–,-,–,–,-,–,-,–,-,,-,-,-,–+90

‘80 ‘82

‘84 ‘86 ’88 ’90 ‘92 ‘94 ‘96 ‘98 ‘00 ’02 ’04

ITR												31
			Nondefense Capital Goods New Orders
					Billions of $
R-O-C										MMT
120	1/12					Sep ‘00					1450
											105.2
											102.7
100												1250
80												1050
									Mar’02
							Dee ‘00
60												850
											$663.4
40												650
20												450
	‘94	’95	’96	‘97	‘98	‘99	‘00	’01	‘02	‘03	‘04

30

115

110

105

9~

ITR

Company M to Durable Goods New Orders (W/O Aircraft)
12112 Rates-of-Change

32

shapeType75fBehindDocument1pWrapPolygonVertices8;10;(21498,0);(19326,0);(19326,1019);(0,1019);(0,14717);(13678,14717);(13678,21496);(20193,21496);(20193,8825);(21498,8825)posrelh0posrelv0pib

– DURABLE GOODS

Sales
220
200
180
160
140
120
100
80
60
40
20
0
	’97
/

– Sales

‘98

‘99

’00

’01

			Goods
				118
				115
				112
				109
				106
				103
				100
				97
				94
				91
				88
				85
‘02			’03

ITR

Durable Goods New Orders to Durable Goods Inventories
Rates–of-Change

33

shapeType75fBehindDocument1pWrapPolygonVertices8;4;(21496,0);(0,0);(0,21498);(21496,21498)posrelh0posrelv0pib

–Orders 12/12

–Inventories 1112

–—

120
115
110
105
100
95
90
85
80
75
1960	1965	1970		1975

1980

1985

1990

1995

		120
		115
		110
		105
		100
		95
		90
		85
		80
		75
2000	2005

JTR

Short-Term Interest Rates

R-O-C
205

shapeType75fBehindDocument1pWrapPolygonVertices8;16;(21498,0);(0,0);(0,7562);(61,7562);(61,19375);(862,19375);(862,18974);(12665,18974);(12665,21497);(18843,21497);(18843,11543);(20880,11543);(20880,19375);(21189,19375);(21189,10479);(21498,10479)posrelh0posrelv0pib

1.20

-75 –t––,—,-—-,—-,–—–,–——,–-,—-,–-,—.—-,—r–——r—-,––+ 0

‘90 ‘91 ’92 ‘93 ’94 ’95 ’96 ‘97 ‘98 ‘99 ‘~O ‘01 ’02 ‘03 ’04

Isource: ITR‘s EcoTreudsl

/

ITR

EASIER SAID THAN KNOWN

“Greenspan hints at interest rate cut” – Nashville Banner

“Change unlikely in interest rates: Greenspan dampens speculation on cut” –

Baltimore Sun

“Cautious Greenspan hints at a cut in rates” – Newark Star Ledger

“Greenspan: little risk of recession” – USA Today

“Greenspan: Uncertainty abounds” – NH Union Leader

“If I say something which you understand fully in this regard”, he told a Senator, “I
probably made a mistake” – Associated Press

34

MMA
24

35

/

ITR

Interest Rate Comparison

1995

2000

	20
	18
	16
	14
	12
	10
	8
	6
	4
	2
	0
2005

18+––——––—~–~—————————–——–+
16+–————–.~H_————————-–——_+

10+–—~.~––––~~~~~H—~‘~_r——––—-––––—_+
8~—_+~hr~~–—–—~~~~~~—~~~~L–~–—_+

0+’-,,–,,–,,-,,–,,-,,,-,,-,,-,,-,,-,,-,,-,,,,,,-,,-,,_+

1970

1975

1980

1985

1990

–PRIME RATE

–FUND RATE

ITR

Federal Funds Target Rate to the US Economy

FFUNDS
200

NEW ORDERS
140

175

shapeType75fBehindDocument1pWrapPolygonVertices8;16;(20639,0);(857,0);(857,10351);(0,10351);(0,11463);(857,11463);(857,20703);(4850,20703);(4850,17352);(13082,17352);(13082,21500);(20639,21500);(20639,11463);(21500,11463);(21500,10351);(20639,10351)posrelh0posrelv0pib

150

125

75

50

–FFUNDS

–NEW ORDERS

25 +–“,-,-“,-“”,—–,–-“,—,—–r–r,-–,––-“,-“r-r,-“”–,–-,––,,,,+ 70

1970

2000

2005

1975

1980

1985

1990

1995

36

37

130

120

110

90

80

ITR

US Industrial Production to Corporate Bond Prices
12112 Rates-of-Change

Index
115

Bonds
130

—Corporate Bonds

85 +––,—–—,——,—––,–––,-–,–,-–,––,–-.,––.,-—-–-,—–,––,—‘– 70

1970

1975

1980

1985

1990

1995

2000

2005

[source: ITR’s Ecoirendsl

/

M2 Money Supply
Trillions of 82$

ITR
R-O-C
110
108
106
104
102
100
98
96
94
92
90
	’93	‘94
									MMA
										4.2
										4.0
									105.9	3.8
									104.8
										3.6
										3.4
									$3.226
										3.2
										3.0
										2.8
										2.6
										2.4
						––-,-			22
‘95	‘96	’97	’98	‘99	‘00	‘01	‘02	‘03	’04

shapeType75fBehindDocument1pWrapPolygonVertices8;6;(21497,0);(0,0);(0,21496);(16704,21496);(16704,14494);(21497,14494)posrelh0posrelv0pib

[source: ITR‘s EcoTrends[

38

39

	ITR												40
					Company M to M2 Money Supply
						12/12 Rates-of–Change
	240												114
	220					n				112
	200									110
	180									108
	160												106
	140												104
	120												102
	100												100
	80												98
	60												96
	40				–Sales							94
	20				–Money							92
	0												90
			’97		’98	’99	‘00	’01	’02		’03
/
ITR
R-O–C
104
103
102
101
100
99
98
97
96
95
94
93
	’90	’91

U.S. Composite Leading Indicator
1996 = 100

MMA
145

1112

shapeType75fBehindDocument1pWrapPolygonVertices8;12;(18989,0);(6306,0);(6306,1864);(0,1864);(0,21496);(18409,21496);(18409,8201);(21497,8201);(21497,7327);(18858,7327);(18858,2233);(18989,2233)posrelh0posrelv0pib

140
102.2 135

100.8

120
115
11\.3 110

105
100
95

+–––,-––,–––,–—,–––,–––,–—,—,–––,–,––,––,–––,–—,—–+ 90

‘92 ’93 ’94 ’95 ‘96 ‘97 ’98 ’99 ‘00 ’01 ’02 ’03 ’04

Isource: ITR‘s ECOTrendsl

41

130

ITR

Purchasing Managers Index
ISM

42

shapeType75fBehindDocument1pWrapPolygonVertices8;8;(864,0);(0,0);(0,21495);(21498,21495);(21498,0);(20691,0);(20691,312);(864,312)posrelh0posrelv0pib

‘90 ’91 ‘92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ‘00 ‘01 ‘02 ‘03 ‘04

ISource: ITR‘s EcoTrendsl

ITR											43
		Company M	to Purchasing Managers Index
				Rates-of–Change
240											135
220											130
200											125
180											120
160											115	\,
140											110
120											105
100											100
80											95
60											90
40											85
20							U			80
0											75
	‘97		‘98	‘99	’00	‘01	‘02		’03

/

/

	44
lTR
ITR Leading Indicator
120	120
115	115
110	110
105	105
100	100
95	95
90	90

‘90 ‘91 ‘92 ‘93 ‘94 ‘95 ’96 ‘97 ‘98 ’99 ’00 ‘01 ’02 ‘03 ‘04

Isource: ITR‘s EcoTrcDdsl

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ITR

R–O-C
145

130

115

85

70

55

40

25

Stock Prices Index
Index, 1941 – 43 = 10

Nay ’99

Oct ‘00

	45
	MMA
	3800
	3400
115.2
	3000
	2600
88.6	2200
	1800
	1400
929.0	1000
	600

10+–––,––,—–,––-,–,,-–,––-,–,,–,—,—-.––,––,–—,––+200

‘90 ‘91 ‘92 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 ‘99 ‘00 ’01 ’02 ‘03 ’04

ISource:ITR‘s EcoTrendsl

ITR

Stock Prices Index
12/12 Rate–of-Change

46

150

150

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140

140

130

130

120

120

110

110

90

90

80

80

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

Isource: ITR’s EcoTrendsl

/

ITR					Stock Prices Index to Total Retail Sales			47
								12/12 Rates-of-Change
Stocks															Retail Sales
150																	110
140																	108
130																	106
120																	104
110																	102
100																	100
90																	98
												–Stocks
80																	96
												– Retail Sales
70																	94
’80	‘82	’84	‘86	’88	’90	’92	’94	’96	‘98	‘00	’02	’04

		48
Oct ’00	1600
		1400
		1200
		1000
		800
		600
		400
		200

ITR

Stock Prices Index
S&P 500, 1941-43 = 10

1600

–3MMA

–12MMA

1975 1980

1985 1990 1995 2000 2005

Isource: ITR‘s EcoTrendsl

/

1200

Bonds?

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1400

Five consecutive years double digit growth
Individual Stocks

1000

Real Estate

800

600

400

200

O+‘~”–‘”’‘‘”””‘–‘””TT”“–,,,,,,,,,,,,,-,rr+O

1960 1965 1970

ITR										49
	New Homes Sales Median Price to Stock Prices Index
					Data Trends
Homes								Prices
220										1500
200										1350
180	—New Homes							1200
160	–Stock Prices Index							1050
140										900
120										750
100										600
80										450
60										300
40										150
20										0
1965	1970	1975	1980	1985	1990	1995	2000	2005

	Sales
		2.6
		2.4
		22
		2.0	\.
		1.8
		1.6
		1.4
		1.2
	-,––	1.0
‘02	’04

lTR

Retail Sales Excluding Automobiles

	50
	MMT
	2.8
	2.6
	2.4
104.2
103.3	2.2
	2.0
	1.8
1.630	1.6
	1.4
	1.2

R-O-C
108

Feb ‘00

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Dee ‘01

92 +–-.-–,—–.—-,––,—-.––,-–,–-,–––,—-.—.——.—-,-–+ 0.8

’90 ‘91 ‘92 ‘93 ‘94 ‘95 ‘96 ‘97 ‘98 ‘99 ’00 ‘01 ’02 ’03 ‘04

Isource:ITR‘s EcoTrendsl

/

ITR

Consumer Expectations and Retail Sales

Expectations
120

110

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100

90

80

70

60

––EXPECTATIONS

— RETAIL SALES

50

40+–-.—.—-,-—.–.-.–.-–.—.––—.—.-–-.––.—,––

‘92

’90

‘94

’96

‘98

‘00

1.0

51

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ITR

Housing Starts (1/12)

52

1oo––—————————––———— 100

75+––+–—–—–—––——––––—–———–—-––––——–––+75

–50+–—––1–—––r—–+––––+—~—––r_–––-+_——+_——~-50

–New York

– Mid Atlantic

/

1996

1997

1998
–U.S.

1999

2000

2001

2002

2003

2004

shapeType75fBehindDocument1pWrapPolygonVertices8;4;(21498,0);(0,0);(0,21436);(21498,21436)posrelh0posrelv0pib

ITR							53
				Housing Starts
				Millions of Units
R-O-C							MMT
145							3.3
130							3.0
115					1l1.O	2.7
					107.2
100							2.4
85							2.1
70					1.764	1.8
55							1.5
40							1.2
25							0.9

10 +–––,–——,-–—,–—,--,––,–—,——–,–,——.—,––.—––.—–.––+ 0.6

‘90 ‘91 ‘92 ‘93 ‘94 ‘95 ‘96 ’97 ‘98 ‘99 ‘00 ’01 ‘02 ‘03 ‘04

Isource: ITR‘s EcoTrendsl

ITR

Housing Starts to Corporate Bond Prices
12112 Rates-of-Change

54

Bonds
140

Housing
180

160

130

60

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80

–Housing

70+––.–.–.—.–-.—.––.–,,-,,–-,–,–,—,––,—,––,–.–-,~40

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

55

Isource: ITR‘s .ECOTrendsl

130

120

110

90

80

70

60

/

ITR

Housing Starts to Appliance Market Production
12/12 Rates–of-Change

Starts
120

Production
140

shapeType75fBehindDocument1pWrapPolygonVertices8;18;(20690,0);(805,0);(805,8503);(0,8503);(0,9327);(744,9327);(744,20673);(184,20673);(184,21497);(21250,21497);(21250,20673);(9443,20673);(9443,11690);(20690,11690);(20690,9327);(21499,9327);(21499,8503);(20690,8503)posrelh0posrelv0pib

115

110

105

95

90

85

–Starts

–Appliance Production

80

’90 ’91 ’92 ‘93 ’94 ‘95 ’96 ‘97 ‘98 ‘99 ’00 ’01 ‘02 ‘03 ‘04

ITR																56
						Construction Markets
						12112 Rates-of-Change
130																130
120																120
			i”\
			.. ,
110		.: ..										:~\			110
													.
100																100
90																90
80							— Office Buildings							80
							— Public Construction
70							– – – – Private Educational Buildings					70
60																60
	‘90	‘91	‘92	‘93	‘94	‘95	‘96	‘97	‘98	‘99	’00	‘01	’02	‘03	‘04
/

ITR

FEDERAL BUDGET ANALYSIS

SURPLUS
300

PERCENT
30

200

100

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-100

–SURPLUS – BILS. OF $

–200

–PERCENT OF GDP

·300+—+-–~~–1–+—+--~–r–1--+—+-–~–r~––+—+—+—r~~+—+-–+–30

1900 1910

1920

1930 1940

1950

1960 1970

1980 1990 2000

57

20

10

–10

·20

TTR													58
			Annual Federal Deficit History
					Billions of Dollars
320													320
280													280
240													240
200													200
160													160
120													120
80													80
40													40
							Civil War
0													0
-40 –													–40
	1800	1810	1820	1830	1840	1850	1860	1870	1880	1890	1900	1910

/

ITR Fed. Government Cash Account to US Industrial Production Index
Data Trends

Index

Cash
480

165

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150

135

—Index – Annual Averaqe

120

—Cash – Bils. Of $ Monthly

105

90

75

60

45

30

15

o

-15 +–—.––,––.—-–,—––,–––.—--,-–,—-,-–,–-,—––.-~~,_-_,_–_,_–_, -240

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

59

420

360

300

240

180

120

60

o

–60

-120

-180

ITR National Defense Expenditures to Defense Capital Goods N.O.

12/12 Rates-of Change

Expe nditures
120
116
112
108
104
100
96
92
88
1970	1975

shapeType75fBehindDocument1pWrapPolygonVertices8;10;(20711,0);(0,0);(0,21496);(2629,21496);(2629,17439);(20711,17439);(20711,11271);(21498,11271);(21498,10041);(20711,10041)posrelh0posrelv0pib

– Expenditures

–Orders

1980

1985

1990

1995

2000

2005

/

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32.5

~.~

~ ~i1S J,}us 1, Current Prices
~ f percft off‘0r1d GDP

2\ 2.0 1.5 1.5

ITR

Orders
175

60

160

145

130

115

85

70

61

ITR

/

ITR

Things You Ought To Know About China

Banking Crisis

Under–funded Welfare Liabilities

Incredible Pension Liabilities
Deficit – Public Debt

Negative Demographics

High Unemployment – civil unrest

7 ofthe 10 most polluted cities
Environmental laws selectively applied

Public Debt as a percent of GDP for 2002

1 ••• –1 _ —– –—–— —. –-·–––-l

I

oUS

I I

CD France

I

• Germany •••••••••
I

II Canada

I

62

63

CD Italy

o China

OJapan

(‘0’:~‘:?” “.(‘,., .. ···’;::;·\iif~i ” .i~–” .‘J5·:;jJ

I I

I

1

I

I

o

20

40

60

80

100

120

140

160

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I

ITR

lTR

Needed:.

True Commercial Banking
Independent Judiciary

True Corporate Profitability
Ba~kruptcy

The WTO and YOU

Exports by Nation
Billions of US Dollars

Source: IMFIWPO

64

6S

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		$974.1
1000
900
800
700
600
500
400
300
200
100
0
	Q US	II Germany	o Japan

o UK II France [J China II Italy 0 Canada

 

1 of 2The Insitiute for Trend Research – Projecting When Economic