1. “By the way, does anything other than ‘trouble’ rhyme with ‘bubble’?”

2. Here Comes The U.S. Slowdown …How Bad, And How Long? Ian C. Shepherdson Chief U.S. Economist, High Frequency Economics

3. The Root Of The Problem

4. Soaring Sales Have Driven Prices Up

5. Soaring Prices Encourage Equity Extraction…

6. …And Equity Extraction Boosts Spending

7. Meanwhile, Construction Has Boomed Too

8. But Homebuilders Became Greedy

9. Now, Soaring Inventory Is Depressing Prices Now, Soaring Inventory Is Depressing Prices

10. …As Prices Slow, Real Mortgage Rates Rise

11. …And As Real Rates Rise, Home Sales Fall

12. Put It Another Way: Homes Are Expensive

13. Plunging Home Sales Will Hurt Retailers

14. Soaring Gas Prices Also Hurt Consumers

15. Lower Confidence Implies Slower Spending

16. Retailers Are Already Shedding Labor

17. Broad Payroll Growth Is Slowing Too…

18. …With More To Come

19. Meanwhile, Manufacturing Is Doing Well…

20. But It Won’t Last, As Higher Rates Bite

21. The Manufacturing ISM Will Drop Next Year

22. Expect A Sustained, Broad Slowdown

23. In The Meantime, The Labor Market Is Tight

24. Faster Wage Gains Are Pushing Up Costs

25. Slower Growth, Rising Costs Hurt Earnings

26. Core Inflation Has Clearly Picked Up

27. Rents Aside, Not Much Is Happening

28. The Fed Can’t Stop Rents Rising

29. The Lower Dollar Is No Inflation Threat

30. The Good News: The Trade Deficit Will Fall

31. The Bad News

32. Summary Growth will slow further; housing first, then industry The Fed is done, easing starts late 06/Q1 07 Rising labor costs threaten earnings more than inflation Treasury yields are set to trend lower; stocks are in trouble