A May 15 commentary by Paul Kasriel at Northern Trust posts the chart above, illustrating the role of housing demand as a leading economic indicator. Downturns in housing demand have predicted three of the last two recessions. The recent slide in this Association of Home Builders index will certainly give the Federal Reserve pause as it contemplates whether to raise interest rates a seventeenth time next month. What makes their job a bit more challenging is the gradual up tick in inflation occurring at the same time as the economy may be poised to slow.

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