Catherine Boyle, The Times
May 7, 2009
Well, it looks like the recovery is the light we see at the end of the tunnel, prices seem to be bottoming out, sales seem to be rising, and unemployment is not growing as fast.....it all sound Great doesn't it!
Okay, if you've read any of my stuff, you that that first line is dripping wet with sarcasm. I hate to be the barer of not so good news, but I don't see things as perky as the AP, The Times, Reuters or any of the Obamedia that seems to be avoiding some very large elephants in the room.
First, Housing prices. There has been a slow-down in price declines and even some markets a slight increase in prices for housing. Is the cause a reversal of the housing market, bottoming out as some might say, or.......could it be that the Fannie & Freddie moratorium on foreclosures has created a small bubble of its owe. Here in Central Florida, where I work as a Mortgage Officer, March 09, we saw a drop in inventory to a level that was encouraging. I deal a lot with Realtors that list Fannie foreclosures and they shared with me sales info that showed that this area's inventory dropped to 11 months. This means that if sales and inventory remained the same, it would take 11 months to sell all the homes listed. Wow, that sounded great. But, and there's always a But, we reminded ourselves that Fannie and Freddie hadn't foreclosed on any homes in the last 5 months or so. What does that mean?
It means that there is a back log of foreclosed properties that will come on to the market in the next few months, killing the prices and driving up inventories. Again, when government gets involved and doesn't let the markets work them selves out, we see artificial movements in those markets and the news can be pushed by the media, in this case as good news, or if this was happening in the Bush years, they would be mentioning everything I just said.
On the employment front, the news is that we "Only lost 529,000 jobs in April, less than predicted and the smallest amount in 6 months". But have we forgot something coming around the bend in that tunnel, like the Chrysler BR and the soon BR of GM? You may think that these two companies employ quite a lot of folks, but if we're recovering, that won't be so bad, we can handle it. But these companies don't just employ folks, they make employment possible for hundreds, if not thousands of smaller companies and mom & pop shops, making all the items that go into the cars they build and parts stores for after market goods. This is not to mention the stores and services that rely on the income of the workers, feeding their families, buying their clothes, going to the doctor......and every other mundane job that families do everyday. This will be a significant blow to our economy, driving unemployment up to over 10% (my prediction). And then, GM comes out says, after their restructure is over, that they will be moving quite a few of the lost jobs overseas, never to be seen again in this country.
Look, I'm usually the "glass if half full" kind of guy, however hard it's been to be that way recently, but is it me or are the media and government officials trying to talk us out of a recession, not paying attention to the short term future I've just mentioned.
I do see a light at the end of the tunnel, my only fear is that it's a diesel locomotive, which by the way isn't carrying GM or Chrysler cars.
The only positive I see is the stock market, which, as BAHL's Blog points out, is one of the best indicators of a soon-to-be recovery. Let's hope that he is right and I am wrong, it wouldn't be the first time.