We have to quit watching CNBC. There are mornings when it’s tough to get out of bed to bring you another harbinger of doom and gloom here at EconomicCollapse.net. If we make the mistake of turning on CNBC it quickly becomes time for an early morning Valium cocktail. Shaken, not stirred.
This is one of those mornings. The latest stats, as revealed by CNBC, show that the economy is shakier than a dashboard hula dancer.
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If there are two words you don’t want to hear used to describe the economy they might be “horror show.” But that’s exactly how CNBC and one prominent investment fund manager described it.
The last month has been a horror show for the U.S. economy, with economic data falling off a cliff, according to Mike Riddell, a fund manager at M&G Investments in London.
“It seems that almost every bit of data about the health of the US economy has disappointed expectations recently,” said Riddell, in a note sent to CNBC on Wednesday.
“US house prices have fallen by more than 5 percent year on year, pending home sales have collapsed and existing home sales disappointed, the trend of improving jobless claims has arrested, first quarter GDP wasn’t revised upwards by the 0.4 percent forecast, durables goods orders shrank, manufacturing surveys from Philadelphia Fed, Richmond Fed and Chicago Fed were all very disappointing.”
“And that’s just in the last week and a bit,” said Riddell.
Pointing to the dramatic turnaround in the Citigroup “Economic Surprise Index” for the United States, Riddell said the tumble in a matter of months to negative from positive is almost as bad as the situation before the collapse of Lehman Brothers in 2008.
Bad to worse. Worse to worser. Worser to worst. It don’t take a weatherman to know which way the wind blows. And it don’t take a crystal ball to see which way the economy turns.
Source: CNBC
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No matter how often nor how loudly government officials trumpet an imminent recovery in the housing market, take it with a grain of salt. A very large grain of salt. Fact is, there’s a huge backlog of foreclosed properties out there and that means any housing recovery is a pipedream.
MSNBC explored the depth of the crisis:
Sales of homes in some stage of foreclosure declined in the first three months of the year, but they still accounted for 28 percent of all home sales — a share nearly six times higher than what it would be in a healthy housing market.
Foreclosure sales, which include homes purchased after they received a notice of default or were repossessed by lenders, hit the highest share of overall sales in a year during the first quarter, foreclosure listing firm RealtyTrac Inc. said Thursday.
“It’s an astronomically high number,” said Rick Sharga, a senior vice president at RealtyTrac. “In a normal market, you’re looking at the percentage of homes sold in foreclosure to be below 5 percent.”
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I’m doing a re-fi on my house and just got the appraisal back yesterday. The bad news: It’s now worth about half what it was worth three years ago. The good news: Well, there really isn’t any.
Of course, I live in California so the drop has probably been more precipitous than the drop in most areas, but still…
The point is that anyone who tells you the real estate market is getting better is dreaming. Or lying. Take your choice.
Want more proof than the idle ramblings of a disgruntled California homeowner? Check out the latest findings from Zillow Real Estate Research:
“Home values fell three percent in the first quarter of this year, marking a pace of decline not seen since 2008 when the housing recession was at its worst.
“Home values fell one percent between February and March and 8.2 percent from March 2010. The cumulative decline in home values since the market peak is now 29.5 percent (see Figures 1 and 2).”
These charts tell the terrible tale:
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“The best investment is real estate.” How many times have you heard that one? It certainly was a great investment from 1991 to 2005, during the fastest increase in home prices ever. But then that lead to the biggest and fastest decline in home prices ever. So, if you’re a great market timer, real estate is a fabulous investment. But if you’re like every other dumb schmuck, it doesn’t always work out all that great.
In fact, think about this: If you bought the median priced single-family home at the 1979 peak, it’s actually lost 8.5% of its value, in inflation-adjusted dollars. Hard to believe? Take a look at the chart.
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