Sure Mr. McCain...the economy is just fine
“‘July was absolutely awful,’ said Steve Doyle, president of the San Diego division of Brookfield Homes. ‘It was the worst month I’ve ever seen.’”
“New-housing market analyst Sharon Hanley reported 193 sales at 1,090 projects in the county in July, off substantially from the July 2007 count of 639. Just three years ago, the all-time July peak sales total was 1,578. Early indications are that sales in August were up a bit but not much better.”
“Hanley’s other findings for July: a cancellation rate of 43.1 percent, up from 27.4 percent in July 2007; weekly traffic to sales offices down to an average 22 visitors per tract, a record low for July; and 84.6 weeks of unsold inventory, more than double the 35.3-week level a year earlier.”
“‘What’s hurting right now is builders can’t sell when there are foreclosures only 10 blocks away that are two or three years old,’ Hanley said.”
Overall, I anticipate that real GDP growth in the second half of this year will come in below the growth of potential output which implies that the unemployment rate will rise. On its own, this obviously is not good news. And its interaction with the housing and financial markets raises the potential for worse news—a deepening of the adverse feedback loop I've been describing: more unemployment causing more people to fall behind on their mortgage payments, leading to further delinquencies and foreclosures, tighter credit conditions and further downward pressure on activity and employment. This kind of process represents a downside risk for the economy, especially if it intensifies the sagging consumer and business confidence we've seen.
The housing market has yet to find its bottom; credit markets remain tempestuous; creditors are tightening their standards; consumers and businesses are battening down the hatches and reefing in their sails. The prices of Chinese and other emerging country labor and inputs we have come to depend on have been rising; business margins are being squeezed; consumers are suffering from declining real incomes; savers and investors are confronted with negative real rates of return. These are hardly fortuitous circumstances.
“Because so few homes are selling, it is impossible to accurately gauge how far prices have dropped, or at what rate. Everyone has a guess. Fifteen percent? Twenty-five? Thirty percent down so far and heading to 50? Hardly any homes that last sold in 2006 or 2007 have resold this year, so that measure is incomplete.”
“About 220 homes are for sale now and only about 100 will sell during the whole year. Conclusion: Rapid price declines.”
“Metropolitan Phoenix was the home-builder capital of the country a few years ago. But the industry has shrunk with the housing market’s downturn. A few home builders, some Valley-based, have filed for bankruptcy. Some smaller home builders have closed their doors. And other builders, including a few large ones, have walked away from empty lots, model homes and entire subdivisions.”
“Several Valley subdivisions have been foreclosed upon. ‘Rumors abound about this builder and that builder,’ said real-estate analyst RL Brown. ‘Subs aren’t paid by a handful of builders. Contracts are renegotiated, layoffs occur. Divisions are consolidated. Management changed. Mortgage brokers close and a bank or two fail. Investigations into unlawful practices grow by the day.’”
Can you imagine what things would be like if McCain became President and said the economy sucked????
He would probably say "put some lipstick on that pitbull," if I suffered in a POW camp for five years and suffered losing to Bush and waiting for eight years, its now your turn to suffer with an overleveraged economy as I tell you I am going to cut taxes and see how large a deficit we can create as few are paying taxes anyway.