Two Shots To The Gut

Once again, I don’t know what Wall Street is thinking – our economy is sucking wind.

Consumers know it.

Consumer confidence crumbled in April as rising gasoline prices undermined how Americans feel about the prospects for economic growth, a widely watched gauge of the economy showed on Tuesday.

The New York-based Conference Board said its Consumer Confidence Index dropped to 104.0, in April, down from a revised 108.2 in March. Analysts had expected a reading of 105. The April reading was the lowest since August, when the index was at 100.2.

The Present Situation Index, which measures how shoppers feel now about economic conditions, decreased to 131.3 from 138.5 in March. The Expectations Index, which measures consumers’ outlook for the next six months, declined to 85.8 from 87.9.

“Unlike the decline in March, which was solely the result of apprehension about the short-term outlook, this month’s decline was a combination of weakening expectations and a less favorable assessment of present-day conditions,” said Lynn Franco, director of The Conference Board Consumer Research Center, in a statement. “Rising prices at the gas pump continue to play a key role in dampening consumers’ short-term expectations.”

Existing home salesconfirm it.

Sales of existing homes plunged in March by the largest amount in nearly two decades, reflecting bad weather and increasing problems in the subprime mortgage market, a real estate trade group reported Tuesday.

The National Association of Realtors reported that sales of existing homes fell by 8.4 percent in March, compared to February. It was the biggest one-month decline since a 12.6 percent drop in January 1989, another period of recession conditions in housing. The drop left sales in March at a seasonally adjusted annual rate of 6.12 million units, the slowest pace since June 2003.

The steep sales decline was accompanied by an eighth straight fall in median home prices, the longest such period of falling prices on record. The median price fell to $217,000, a drop of 0.3 percent from the price a year ago.

The fall in sales in March was bigger than had been expected and it dashed hopes that housing was beginning to mount a recovery after last year’s big slump. That slowdown occurred after five years in which sales of both existing and new homes had set records.

[snip]

There was weakness in every part of the country in March. Sales fell by 10.9 percent in the Midwest. They were down 9.1 percent in the West, 8.2 percent in the Northeast and 6.2 percent in the South.

7 thoughts on “Two Shots To The Gut

  1. Andrew Byrne says:

    I think it is obvious what they are thinking; the same thing Uncle Alan was when he told us all to get ARM when the fed was at an all-time low, and about to go back up:
    Pump the bank before it–and all your externalities–collapse.

  2. John H. Farr says:

    “Once again, I don’t know what Wall Street is thinking – our economy is sucking wind.”
    Well, higher oil prices benefit the oil companies, ’cause people have to buy gas. In lots of ways, I guess corporations ARE doing just fine. But they’ll feel the sucking wind soon enough.
    I think Wall Street is like the housing market. It’s a musical chairs thing: everybody knows the rising prices are crap and have to fall, but in the meantime there’s money to be made. As soon as the gusher stops, people run for the chairs, and some will have no place to sit. As soon as the really bad news washes back to corporate earnings, the market will drop like a stone.
    This housing thing is really bad, though, and it hasn’t really hit full speed yet. This is not a nation of people who can afford half-a-million dollar houses unless there’s a bigger fool waiting in line after them. When the supply of fools dries up, well… just watch.
    I of course know absolutely nothing about this and have always guessed wrong in my personal financial strategies. Our old house in MD appreciated less than one percent a year for the 13 years we owned it (purchased for $99K, sold for $110K). That used to be normal. Since we sold in 2000, prices have almost tripled in that area. That is simply a crock, and the Big Kahuna has some major smiting in store for all those smug bastards.
    Or maybe not! 🙂

  3. AnE says:

    an addendum: As I recall, the greenspan comment was from early ’04; the next change in the Fed (Summer?) was the first rate hike in _years_.

  4. AnE says:

    John, I think the housing market in MD is somewhat elevated due to the boom in DC. (And while we had the party of *smaller* government in power?) Here in Baltimore, we have seen “flipping” become the latest fad… _Baltimore_, ok?
    I agree that the housing market is looking to spill, but unless the military gets off its’ 50-year steriod binge, I think the crash will avoid southern MD for quite some time; the government is the _last_ company to downsize…

  5. MapleStreet says:

    Thank you John for the “musical chairs” and then the music stops and everyone dives for a seat analogy. Best, easily understood explanation I’ve seen.

  6. sparky says:

    The economy. Is it possible that the ignorance of so many American buyers is being reflected in today’s marketplace? There can be no question, can there – that any stench that you whiff is a result of the stupidity of buyers? I mean – credit card debt is clearly a blessing in disguise, but there comes a time when the “big spender” MUST face the music. Huge numbers of otherwise seemingly intelligent people wave their credit cards through those auto-magic readers as if they actually have the money they’re spending. Good golly, Miss Molly! One old reference will work wonders for you, if you follow its parameters religiously. DON’T SPEND MORE MONEY THAN YOUR INCOME!!!!!! First saving a little money, and then saving a little more, and leveraging your spendable income, and pretty soon, you’ll be a multi-millionaire. Peeing pennies away, day after day, gives you only one outcome. Guess what it will be. Think for a moment, and see if you can figure out the difference between “spending” and “investing”. Then go to this one.. is there a difference in your mind between “wanting” and “needing”? Sparky.

  7. MapleStreet says:

    To add to your comment, Sparky – not to mention that credit cards shamelessly charge 15% interest, 20% interest… while inflation is 2 to 3%. Not a bad ROI. Now don’t get me started on the Payday loan businesses (and the idea of making it illegal to take advantage of the poor military folks who always can fall back on the military room, board and healthcare – while leaving other people without this security as fair game.

Comments are closed.

%d bloggers like this: