Today in the economy

[killersheep]

3/25/09

USA - Core Durable Goods Orders

Actual3.90%|Forecast-2.00%|Previous-3.00%

Derivative of Durable Goods Orders that omits the Transportation components.

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USA - New Home Sales

Actual337.00K|Forecast302.00K|Previous309.00K

Determines the annualized amount of new residential buildings that were sold during the last month.

[Kirkland Laing]

3/25/09

USA - Core Durable Goods Orders

Actual3.90%|Forecast-2.00%|Previous-3.00%

Derivative of Durable Goods Orders that omits the Transportation components.

-------------------------------------------------------------

USA - New Home Sales

Actual337.00K|Forecast302.00K|Previous309.00K

Determines the annualized amount of new residential buildings that were sold during the last month.

Durable goods going up is good but it now depends whether those goods get shipped out to businesses to replace stuff they've sold.

Housing less relevant. That number is subject to change. From the report :

Sales of new one-family houses in February 2009 were at a seasonally adjusted annual rate of 337,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development.

This is 4.7 percent (±18.3%) above the revised January rate of 322,000, but is 41.1 percent (±7.9%) below the February 2008 estimate of 572,000.


So this report is accurate to plus or minus 18% by its own admission. Could be subject to a large alteration later. Also, year on year, sales down at least 30%. So not good.

Existing home sales numbers that we saw a few days ago were almost half foreclosed homes sold off by the banks. So the numbers of actual sales are just pathetic compared to a year previous.

Some housing predictions. There'll be two bottoms in the housing markets.

First single-family housing starts and new home sales will bottom.

Then existing homes will bottom. The first bottom may happen this year, the second could take another two years. Exactly when they happen depends on how many more trillions the government pumps into the economy and when, or various other events. But certainly prices will continue to fall, they're not at bottom yet.

We need to see residential investment and personal consumption expenditure start to turn around. These are the leading indicators that show us when we're coming out of recession. It could happen this year, probably next -- subject again to future events regarding government money-printing, international events etc. I can be more accurate as we get closer, it's hard even for my Infallibility to predict more than a week or three in advance at the minute with so much going on.

Unemployment is the biggest worry of this recesion right now (as of going to print with this post, subject to change due to future events etc.) The toxic assets that have bankrupted the banks are made up of individual mortgages (or are bets on those mortgages). If unemployment keeps going up then more and more people walk away from their mortgages and more and more assets become worthless, further bankrupting the financial system. The business classes don't care about unemploymnt normally, there's a few months recession then everything is back to normal apart from unemployed pepole and it's tough luck for them. Unemployment almost always persists and even goes up long after a recession technically ends. So we may see growth return late this year or next year and the recession end but unemployment continue to rise. this time that will affect everything as the solvency of the financial system and the abiltiy the government has to currently pretend it's solvent is governed by the value of those mortgage securities, the price of which is governed by people continuing to pay those mortgages and not walk away, etc. Even when the recession does end we're going to go sideways more than upward. Future growth will be very sluggish, subject to reverses, etc. etc.