U.S. Economy = “Walking Pneumonia”
Posted by Larry Doyle on March 30, 2010 12:36 PM |
The other night in my conversation with Richard Davis on No Quarter Radio’s Sense on Cents with Larry Doyle, I defined my outlook for the U.S. economy in 2010 as the equivalent of ‘walking pneumonia.’ What do I mean? Let’s look at today’s economic releases, Consumer Confidence and Home Prices.
Although pundits may want to promote the rebound in these statistics as a harbinger of economic health, I personally do not think we will see these measures running away from us anytime soon. Have you ever had ‘walking pneumonia?’ I have. You don’t move all that quickly. At times, you wonder what the hell is wrong with you. Welcome to the Uncle Sam economy 2010.
The Wall Street Journal, in an attempt to capture the sunshine amidst the torrential economic monsoon that we have experienced, highlights this morning’s developments in writing Home Prices Mostly Flat. Pardon my sarcasm, but my immediate thought in reading that title leads me to think that the patient is mostly healthy, with the exception of losing his left leg. Let’s navigate a little further. The WSJ writes:
U.S. home prices were mostly flat from a year earlier in January, according to the S&P Case-Shiller home-price indexes.
Separately, U.S. consumer confidence rebounded in March from a steep drop in February. But with consumers still worried about jobs, the index remains below its readings of December and January, according to a report released Tuesday.
S&P’s David Blitzer called the home-price report “mixed,” noting, “The rebound in housing prices seen last fall is fading.”
Prices in 10 major metropolitan areas were flat in January from a year earlier, while the index for 20 major metropolitan areas dropped 0.7% year over year. The readings last grew on a year-to-year basis in January 2007.
Compared with December, adjusted for seasonal factors, the 10-city index rose 0.4% on month in January, while the 20-city composite climbed 0.3%. Unadjusted the 10-area index fell 0.2% and the 20-area index declined 0.4%.
The recovery in the U.S. housing market has been fragile. Last week, the National Association of Realtors said sales of existing homes fell a better-than-expected 0.6% in February from a month earlier, as a glut of homes for sale and a wave of foreclosures and fire sales are holding down housing prices.
The Conference Board, a private research group, said its index of consumer confidence increased to 52.5 this month, from a revised 46.4 in February, first reported as 46.0.
The March reading was better than the 51.0 expected by economists surveyed by Dow Jones Newswires, but the index is below the 53.6 in December and 56.5 in January. This suggests consumers are wary about the strength of the recovery and about labor markets in particular.
I strongly recommend that people not get caught up in the daily, weekly, or even monthly reports. Take a step back and look at things from a quarterly, semi-annually, and annual basis. Let’s work a little harder to eliminate the noise in figures so we can grasp the fact that the economic road in front of us will remain long and hard. We’ll make it. I am fully confident. That said, much like those with ‘walking pneumonia,’ we need to take care of ourselves rather than allow the daily spin to trick us into believing we are healthier than we really are.