The Lehmann
Letter (SM)
All past
housing recoveries have been V-shaped not L-shaped. The current recovery is L-shaped
rather than V-shaped. That's because the Fed contributed to past downturns by
raising rates and sparked recoveries by reducing rates. This time we had an
asset-bubble that popped and the Fed can't stimulate expansion by lowering
rates.
Yesterday's
letter pointed out that optimism accompanying April's increase in existing-home
sales should be tempered by placing recent data in historical context. That
context shows how weak existing-home sales are compared to past performance and
how anemic this recovery remains when compared to past recoveries from
recession.
New Home
Sales
(Recessions
shaded)
Today's
Census Bureau report on April new-home sales strengthens that observation:
The report
says:
“Sales of new
single-family houses in April 2012 were at a seasonally adjusted annual rate of
343,000. This is 3.3 percent (+/- 12.3%)* above the revised March 2012 estimate
of 332,000.”
Sales continue
to bump along the bottom with no V in sight.
(To be fully
informed visit http://www.beyourowneconomist.com/)
© 2012
Michael B. Lehmann
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