Today in the economy

[Kirkland Laing]

3/23/09

USA - Existing Home Sales

Actual4.72M|Forecast4.45M|Previous4.49M

Pretty straightforward sales of existing homes in the US, this was for the month of February, much higher than anticipated. Also, worth noting, unemployment claims in the US were down in February from 654K to 646K. Unemployment, may be scewed because, people may have run out of unemployment benefits or given up.

Housing sales always go up in February from January. They'll go "up" next month too. The rate they went up is similar to most previous years. House prices are still falling, that's the important thing. The really crucial thing is unemployment though. Unemployment is a lagging indicator of recessions, they're over (measured by GDP growth) well before unemployment stops rising. And that's a big problem for this recession as more unemployment means more defaulted mortgages which means more toxic assets. Economists are flapping over the "increase" in home sales and the "decrease" in unemployment when really they're just seasonal patterns/statistical noise. It's hard to believe they're so clueless but they are.

I disagree that they are just noise, surely people react to these numbers.
Regardless if these numbers are cyclical, positive news could definately have an effect on consumer spending. Would you agree?

If you follow various economic numbers like unemployment/durable goods orders/house prices etc. in America and a bunch of other economies and how increases/decreases in them affect other moving parts of those economies for twenty years then you'll be in a more qualified position to say whether rises and falls are important or not.

The average American consumer isn't paying attention to the rate of housing sales. They're worrying about whether their job is going to exist in a month. American consumers have spent their way into huge indebtedness over the past couple of decades. They've maxed their credit cards out (look for massive amounts of credit card debt default with attendant effects on credit card debt securities values in the future) and even if banks were lending they're not borrowing at pre-crisis levels anymore for a while. Consumer spending, residential investment and the unemployment rate are the numbers worth watching going forward but you've got to put them in context, and you only get context over time.