I Guess The Economy Is Just Peachy Now – The Sixth Month In A Row That The Recession Has Ended

U.S. jobless rate seen highest since 1983

Reuters

WASHINGTON (Reuters) – The U.S. economy likely shed a further 355,000 jobs in June and the unemployment rate hit a 26-year high, but for a nation mired in its deepest recession since at least World War Two that may be good news. http://news.yahoo.com/s/nm/20090702/bs_nm/us_usa_economy_payrolls_1

However, ADP has reported, “Private employers shed another 473,000 jobs in June, according to ADP’s National Employment Report released this morning. http://jan.freedomblogging.com/2009/07/01/adp-reports-473000-job-cuts-in-june/16721/

One out of 6 US workers underemployed

It’s not just the unemployed who are hurting.

If you include people who involuntarily are working part-time and those who want a job but have given up looking, the so-called underemployment rate for the nation was 16.4% in May, say the experts at the Economic Policy Institute. The rate for just those who were unemployed was 9.4%. http://economy.freedomblogging.com/2009/07/01/one-out-of-6-us-workers-underemployed/

Watch for the Government’s upward revision on the under-reported unemployment numbers – The Obama Administration has had to revise upward the numbers it reported 4 months in a row. Today’s report will “estimate” unemployment at 9.6% – that number will later be revised upward to 10% – however the revision will take place on page 12 of your local paper and not be reported by the Main Stream Media.  

Mortgage Applications Fall to 7-Month Low

NEW YORK–U.S. mortgage applications plunged to a seven-month low last week as demand for home refinancing loans tumbled 30%, data from an industry group showed on Wednesday.

The drop does not bode well for the hard-hit U.S. housing market, which has been showing some signs of stabilization, with sales rising and home price declines moderating in many regions of the country.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended June 26 decreased 18.9% to 444.8, the lowest reading since the week ended Nov. 21, 2008.

“Rising unemployment, concerns about job security, potential buyers’ inability to sell their existing homes and problems with appraisals coming in too low are all weighing on demand,”  http://www.foxbusiness.com/story/mortgage-applications-fall–month-low/

U.S.  Auto sales for June 2009 are off an additional 28%.                                                                                                     http://www.washingtonpost.com/wp-dyn/content/article/2009/07/01/AR2009070102167.html 

In June 2008 auto sales were only off 18% not this months 28%, however, the pre-election headlines one year ago described that decline this way ….

Auto sales plunge“, http://money.cnn.com/2008/07/01/news/companies/auto_sales/index.htm?cnn=yes , and “June Car Sales: U.S. Buyers Almost Veer Off the Road”,  to describe the fact that G.M.’s sales were off 8%, Ford’s sales were off 19% and Chryslers sales were off 28%  this time last year. http://www.autoobserver.com/2008/07/june-car-sales-us-buyers-almost-veer-off-the-road.html.

I’d agree with Mike Karagozian at Examiner.com, an inside the industry publication, when he says,   “Down is the new Up, apparently. In the Sunday business section of one of Detroit’s surviving daily newspapers, a headline proclaims, “Forecast has signals of auto recovery,” with this hopeful sub-head: “Annual rate expected to top 10 million.” Don’t bet your 401k on auto industry stock, however. We have entered a new era in mainstream media journalism where bad news is good news; where the glass is always half full. The sales numbers don’t justify a headline that blares “signals of auto recovery.” Auto manufacturers will announce their June sales figures this week and they will be up slightly from May, but down significantly from June 2008. That should come as no surprise. To spin industry sales projections of 10.3 million units as good news or reason for hope, however, is totally bogus. It’s worse than bogus. It’s downright irresponsible. By any standard of measure, a 10.3 million unit sales year is an absolute disaster — unless being at rock bottom is considered good news, which, apparently it is.

Worst-case scenario
According to a recent J.D. Power and Associates press release, “new-vehicle retail sales for the month of June are expected to come in at 789,400 units, which represent a seasonally adjusted annualized rate (SAAR) of 9.2 million units. This is down by 9 percent from one year ago, but up by 14 percent compared with May 2009.”  Except May 2009 was a disaster compared to May 2008. If the J.D. Power projection is correct, a 9.2 million-unit year is worse than any worst-case scenario anticipated by senior management at GM, Chrysler or Ford. Or the Asian and European manufacturers.  If 9.2 (or even 10.3) million sales is sign of recovery, consider that last year (2008), industry sales were 13.2 million and in 2007 sales were 16.1 million. The glass that was half empty is now half full
This bad-news-is-good-news style of reporting has affected the way unemployment figures are portrayed. In January 2009 the unemployment rate was 7.6 percent and the media were apoplectic. The nation’s unemployment rate for May 2009 topped 9.4 percent and is now approaching Europe’s unemployment rate. Instead of predicting economic disaster, we get stories that portray homelessness as an alternative lifestyle choice for hip urban sophisticates who want to reduce their carbon footprint. Don’t take my word for it. Google “homeless lifestyle” and read for yourself. The glass is half empty but we are being asked to believe it is half full. http://www.examiner.com/x-6173-Ford-Examiner~y2009m6d29-June-auto-sales-expected-to-be-down-due-to-weak-economy-unemployment

In 2007, a horrific year in vehicle sales, vehicle sales topped 16.1 million. Last year, 2008, vehicle sales slipped to 13.2 million. The 2009 projection for vehicle sales is between 9.2 million and 10 million, an additional 30% drop, if the the projection proves accurate and sales are not worse.

2009 home sales figures are down from 2008 (If 2008 numbers were a “disaster” why are the 2009 numbers viewed so optimistically?). In 2008 4.68 million homes were sold – in 2009 we are on pace for 4.55 million sales. That represents an additional 3% drop off some very dismal numbers in 2008. http://www.realestateabc.com/outlook.htm

Mortgage foreclosures in 2009 have already topped 1 million (the 1,000,000 mark was passed over Memorial Day Weekend). The currently projected total for 2009 is 3.6 million. http://www.mortgageloan.com/new-foreclosures-top-1-million-in-2009-3320  Don’t forget that a “moratorium” on foreclosures was in place for 90 days in 2009. 

I’m just overjoyed that everything is just peachy now …… and here I though we were just getting more of the same old crap.

Watch for next months claims that things have bottomed out and everything is fine ……… don’t pay any attention to the fact that the “ship of state” is still sinking – you know the ship is sinking just a bit slower now. So what if you get wet, isn’t it a nice day for a swim. Pay no attention to those fins, the “fish” don’t eat much.     

Obama Administration Fudges Report On Home Construction

Just another misleading report from thge Obama Administration – have you seen this headline ……

May housing construction jumps by 17.2 percent – I urge you to read the article before it is pulled and dispapears …. The Obama Administration is only interested in “floating” inaccurate reports to foster a false belief in a “phantom economic recovery” – The reports are later “pulled” without explanation or more troubling, correction by the Main Street Media. Here is what the most recent article states,

“Construction of new homes jumped in May by the largest amount in three months, an encouraging sign that the nation’s deep housing recession was beginning to bottom out. The Commerce Department said Tuesday that construction of new homes and apartments jumped 17.2 percent last month to a seasonally adjusted annual rate of 532,000 units. That was better than the 500,000-unit pace that economists had expected and came after construction fell in April to a record low of 454,000 units.” 

http://news.yahoo.com/s/ap/20090616/ap_on_bi_go_ec_fi/us_housing_starts

Can you believe this – 4 falsehoods in one paragraph.

Here are the real stats from an independent source ……. reporting on the same Commerce Department numbers.

“New housing starts dropped significantly in April, 2009 down 54.2 percent from April, 2008. There were only 458,000 homes started in the month. The Commerce Department also is reporting new housing starts dropped to levels not seen since 1959. New building permits, an indicator of future building, were also down. New building permits, which give a sense of future home construction, dropped 3.3 percent to 494,000 units, the lowest since records started in January 1960, from 511,000 units in March. That was well below analysts’ estimates of 530,000 units. Compared to the same period a year-ago, building permits plunged 50.2 percent. http://www.therealestatebloggers.com/2009/05/19/housing-starts-down-542-percent-for-april-2009/

What does this tell US? After an especially dismal March 2008, the experts estimated that anuual housing starts would approach 530,000 in 2009. That “estimate” has now been increased to 532,000 new home starts for all of 2009, a projected  increase of 2000 homes, not the 32,000 homes reported in the 1st article. (The 1st article incorrectly reports that 2009 housing starts had been estimated at 500,00).  For those that are mathmatically challanged, like those in the Obama Administration and the fawning main street media, a 2000 home increase from 530,000 to 532,000 is not a 17.2% increase but is, instead, an increase of just less than 1%. Just like election polls, a 1% change is within the margin of error and means, from a statistical point of view, there has been no meaningful change in the estimated housing starts between April and May of 2009, unless of course, one fudges the numbers.

The 1st article also contains what might be considered a “lie of omission” when it states that the whopping 17.2% increase (that is actually a 1% increase) is the largest increase in the last 3 months. What a whopper. If, in fact there was an increase in housing starts between April and May, that increase would have been the first such increase since the Obama Administation took office.  

Now don’t be foooled by the fact that housing construction increases as the seasons progress from winter to spring to summer. That is not an event related to the economy, that is an event related to the weather. Builders start more homes in the warm weather than in the dead of winter. All of the experts and anyone who has had a home built, knows this. The number to watch is the “total projected” housing starts for the year. That number now stands at 532,000 from the prior number of 530,000. At year end you then go back an examine exactly how many homes were built and sold in 2009. As the saying goes, the proof is in the pudding.

You may wonder what this amazing, but statistically insignificant, increase of 2000 means. Well consider this headline from last May, May of 2008. 

Housing Starts Hit 17-Year Low in May  June 17, 2008 7:38 AM CST

In what now appears to be a desperate attempt to reduce available supply by home builders, the Commerce Department reported Tuesday morning that new starts on residential construction fell to their lowest levels in 17 years during May. Privately-owned housing starts registered a seasonally-adjusted annual rate of just 975,000, the lowest level since March 1991 and 3.3 percent below a revised 1.008 million pace recorded for April.  http://www.housingwire.com/2008/06/17/housing-starts-hit-17-year-low-in-may/

Hmmm …. now lets see, last year represented a 17 year low, however, the “estimateed new housing starts” in May 2008 were 975,000, nearly twice as many as the 532,000 reported for May 2009. Doesn’t that mean we need to increase 2009 housing starts by an additional 443,000, just to tie last year’s 17 year low. 

Touting an “estimated” increase of 2000 housing starts in 2009 would be like the players of last years winless Detroit Lions running off the field proclaiming “I’m going to Disneyland” after a single victory (the slogan is one usually reserved for the Superbowl Champs). If you set your expectations low enough, missing a 17 year low of 975,000 by 433,000 is considered good news    

The extremely anemic “growth” between April and May 2009 occurred despite the highly touted $8,000 tax credit for those who cannot save a down payment on their own ….  or “Sub-Prime II”, the return of the beast that wrecked the mortgage market in the 1st place.  

You should note that the May 2009 “projection” does not take into account the recent and rapid escalation in mortgage interest rates which has occurred as the Government tries to give billions away in mortgage money that it does not have. As the Government tries to “borrow” the money as fast at it “gives it away” we will see an ever increasing level of interests rates and ultimately, inflation. Higher interest rates and inflation will retard future housing starts.    http://www.oregonlive.com/business/index.ssf/2009/06/mortgage_rates_rise_again.html  

The latest housing numbers are just another example of “the goodnews” being that the “bad news” isn’t any worse …..

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