Service Sector Growth

http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/the-housing-bubble-hangover-part-2.aspx

http://articles.moneycentral.msn.com/news/article.aspx?feed=OBR&date=20100706&id=11633677

The Institute of Supply Management (ISM) is basically a trade group of purchasing executives that produces an "Index" that has been very closely watched by senior executives in Top 500 companies for the last 30 years. When that index is over 50, things are good. It was 37.2 in November, 2008. It's pre-recession high was 67.7 in 2004.

However; the ISM said yesterday that its index tracking "service-oriented" companies dipped to 53.8 last month from 55.4 in May. With 80% of American employment now in the "service sector," a trend backward in that index is cause for concern.

Now, let's go to "housing". We've attached Fleckenstein on "The Housing Bubble, part 2." We've said in the past that we watch housing and unemployment as the two real bottom lines of how the economy is going. Well, here are some numbers:


* 8 million loans in some state of delinquency

* 100/125,000 new notices of default being given out monthly

* A pool of 15 million "short-sale eligible" homes


At a minimum, consumer wealth, as expressed thru home equity, is going nowhere for a while. Interestingly, Fleckenstein sees an extended period where the Dow Jones stays within a narrow trading range (like the 1966 to 1982 period where trading was never more than 300 points plus or minus).

So, job creation: not doing well. And, housing: not doing well.