I came across this highly informative interview with Dr. Lacy Hunt of Hoisington Investment Management on Mish’s blog: Global Economic Trend Analysis. He found it on another blog: johnmauldin.com, and the interviewer is financial journalist Kate Welling. A sample quote:
Kate Welling: I suppose all this means you expect a recession this year?
Dr. Lacy Hunt Well, consumer spending will slow this year very dramatically from a very weak
base. We had a decline in real disposable income in 2011. GDP rose, but GDP
measures spending, not prosperity. In 2011, as is often the case, when inflation rises,
households initially try to maintain their standard of living. So in the face of rising
inflation and trailing wages, which was the story in 2011, families resorted to
increased credit card usage or to drawing down their saving. But in addition to a
decline in real disposable income in 2011, we also saw a net decline in net worth
[lower chart below]. And a year-over-year decline in net worth has been associated
with the start of all the recessions since 1969.
We touch on many of the topics discussed in this interview, including in our recent conversations about Greece. It is well worth the time to go through all 29 pages of the interview.