Is it a recession?
(posted by jackson)
Business Week points to the data suggesting a recession may be on the horizon:
The biggest drag on the economy has so far been, of course, the housing market.
The National Association of Realtors reports Monday on sales of existing homes last month. According to the median estimate of economists surveyed Friday by Thomson Financial/IFR, existing home sales expected to have slipped by about 1 percent in January from December. Then on Wednesday, the Commerce Department reports on sales of new homes, which are anticipated to have slipped modestly in January.
Wall Street is concerned with not only sales, but inventories, which are at very high levels because demand is so weak. The housing market can only start bouncing back once inventories start edging lower — something that many analysts don’t expect to happen for a while.
Meanwhile, there is a new Pew Survey out suggesting that U.S. citizens are being hit by high inflation:
Fully 58% of the public says that their incomes are falling behind the rising cost of living. This compares with just 44% who expressed this view in September 2007. And the impact of the real estate slump is becoming apparent to American homeowners. The percentage of homeowners reporting that their home has increased in value during the past few years has fallen from 84% in October 2006 to 67% currently. …
Overall, 24% cite concerns over prices — with the cost of energy and healthcare mentioned most frequently — as the most important problem facing the country. By comparison, 18% volunteer jobs as the nation’s biggest economic problem, while 13% cite housing — including 6% who specifically cite the sub-prime mortgage crisis.
Brad Sester points out the global quality of the economic hard times:
What does the US have in common with two of its most important creditors?
One answer: all have a significant population worried about how to make ends meet right now.
China exports a ton of goods, but imports oil and grain. And the price of both is rising. Back in November, there was a story circulating – perhaps apocryphal – that some Chinese workers wanted their wages indexed to the price of pork.
The Saudis are a net exporter of oil. But not everyone has shared equally in the oil windfall. Government employees living on a constant salary aren’t pleased by rising prices …
High wheat prices aren’t bad for Kansas, but not all that many Americans make heir living producing grain — or, for that matter, selling US bonds and parts of some US firms to sovereign investors.