Seven Year American Recession Watch Remains On High Alert

CNN Money;

– The National Association of Realtors says pending home [sales] rose 7.4% from July to August, an unexpected piece of positive news for the battered U.S. housing market.
The group said Wednesday its seasonally adjusted index of pending sales for existing homes rose to 93.4 from an upwardly revised July reading of 87. The reading was the highest since June 2007.

Higher demand brought about by lower prices. Who could have predicted such a thing?
h/t Tech1

67 Replies to “Seven Year American Recession Watch Remains On High Alert”

  1. Oh, you are desperate now. I’m rolling on the floor laughing that you are denying a recession. But what do you care?, how much effect does macro economics have on a little hick town?, instead of being broke, living in rickety old houses and driving decades old vehicles you’ll be, well.. I guess it won’t change at all.
    Sl

  2. I just noticed that in the left side bar of the blog your selling the book ‘Behind the Housing Crash’.
    Sorry?

  3. Kate – you’re clearly living under a rock.
    BTW, instead of the numbers, what are the gross dollars, what are the margins? Was there more money made or less?
    You’re beginning to sound like an MBA that only cares that he sold a million widgets overlooking the fact that he lost a million bucks selling the widgets. Volume means NOTHING, DOLLARS mean everything.
    If you need an example a little closer to home. You’re the bingo player bragging about the 3 games and $100 you won, never mind you spent $200 on cards for the $100 return.

  4. LOL… that was the reaction I was anticipating
    Considering the precious few who have proven themselves capable of understanding what the subject line really refers to.

  5. The reality is that you don’t know you are in a recession until you are well into it. The definition is 6 months of negative growth, not slow growth.
    If we are in a recession right now, we won’t know until sometime next year. A market correction is not a recession, although it certainly could lead to one in the future.
    The reality is, at the moment we don’t know if there is a recession, but if you have been prudent and lived within your means, there are bargains in housing and stocks, etc, just waiting to be bought. I know several people who have recently bought in the US housing market (winter homes for my fellow frozen prairie dwellers) and are waiting for Canadian prices to correct before buying here.
    CRC

  6. The other day I was listening to a self-appointed “expert” talk about the recession because the economic growth was small. Wasn’t a recession described as negative growth.

  7. Yes CRC – the one thing I wished I had most right now is enough cash to buy a small acreage about a thousand miles to the south of here – as one of my friends from Kitchener just did in Florida.

  8. Y2K! The sky is falling! The sky is falling!
    Financial sector meltdown in the U.S. The sky is falling! The sky is falling!
    Stock market undergoes a correction. The sky is falling! The sky is falling!
    One thing we’ve found out for sure.
    There’s no shortage of Chicken Littles.
    And, there’s no shortage of slimy marxist politicians wiling to exploit the voting poultry’s fears.
    The stock market will come back. Always has.
    Earlier this decade, my portfolio melted by about 40%, then over a couple of years, tripled off the low.
    Here’s some free advice.
    Gold will act as an alternative currency as the U.S. and Euro eventually plunge.
    People will not stop eating, drinking or smoking.
    Find the companies that meet people’s basic needs of food, clothing and shelter and you’ll make back all the money you lost … and more. Guaranteed.

  9. Kate- “Considering the precious few who have proven themselves capable of understanding what the subject line really refers to.”
    I’m not good at cryptograms Kate. What does the subject line really refer to. Please tell us in good old plain english, because I’ve been seeing that line for a long time now and I’d like to know. (please do explain it, I’d really like to know what you mean)
    Thanks!
    sL

  10. The fundamentals of the economy are strong. And VP Palin can bring over her African witchfinder general to use his spells and incantations to drive the demons out of the financial system.

  11. Maybe a Liberal can fill you in.
    The subject line has a fair amount of sarcasm in it as well a reference to an earlier topic.
    [sarc off]

  12. Kate,
    I can get you a house in Phoenix on a golf course for $40,000.00. Let the little critters frolic on the fairways!

  13. It refers to the steady drumbeat of negativity in economic reporting since the inauguration of GWB – painting growth as recessionary, low unemployment as high, etc. during one of the most economically prosperous periods in US history.
    It has nothing to do with whether or not there is, or will be, a recession.

  14. Yea. Everything’s just tickety-boo. Ignore those banks that are going mams-up. The stock market? Nothing to see there. The economists? Hell, what does an economist know? Forget about what Bush says. And the secretary of the treasury. Hell, why not sell the Saskabush farm and put the money into sub-prime mortgage securities. Have fun :}

  15. I see this as the first step in the new Obamaramic Dionidite redistribution of wealth program – similar to that of a fella in Venezuela!

  16. manny:
    Careful what you say, or Sarah may turn you into a newt.
    She’s a witch, she’s a witch.
    – Monty Python skit
    manny, every time you post, I envision you of those unwashed, superstitious peasants in the Monty Python skit who believe somebody else has cast an evil spell on them.
    Actually, manny, you’re responsible for your own misery.

  17. Lloyd, did you not read Kate’s explanation before you posted? It’s not about things being tickity boo, it’s about playing fast and loose with the technical truth by the MSM since GWB became POTUS.

  18. Buy low, sell high;
    For every seller, there is a buyer;
    &c., &c.
    Unfortunately, for most, the headlines generally send the audience in the wrong direction. Betting against Canada is just stupid.
    Harper has it right. Are you listening Layton; are you listening Dion?

  19. [The problem is more regional than national, at least at the extremes. Texas and North Carolina are experiencing a slight increase in home values, at least at the moment. The hardest-hit areas are Florida, Los Angeles, Las Vegas, and San Diego. Percentages of under-water homeowners who bought in the last 5 years go over 50% in San Diego and Las Vegas, and above 40% in Miami and Phoenix.] hotair.com
    mmmmm, how about a map that compares ‘underwater syndrome’ areas with a map of ‘left leaning tendency’ areas ?

  20. Lloyd, if you don’t look at any news before 2001, you will see that The Vast Left-wing Media Conspiracy has been conspiring to not only lay the blame for predicted economic downturns on GWB but to actually create the economic downturns so that they have something to blame him for.
    Now, if you happened to look at any news before 2001 or if you look at all news since then instead of just nitpicking one financial analyst here and one stock broker there (there is always someone with a doom and gloom story if you look hard enough), you would realize that they were doing the same thing – scaremongering that the bubble was about to burst and recession was just around the corner – under Clinton from about 1997/1998.
    The irony, of course, is that if you don’t nitpick but look at what financial analysts in general were saying at any given time, it turns out they were right.
    But never let contrary facts get in the way of a good conspiracy theory. That’s what they invented tin foil for.

  21. I’d just like to point out to you, Lloyd, that banks going tits-up because they were negligent in their lending has nothing to do with the economy being in a period of growth or recession. Oh, by the way, stocks aren’t linked to economic growth either. And if you read Kate’s earlier post, you’ll see that Economists are often about as accurate as climatologists are at predicting hurricanes. Did you want to add anything that’s actually relevant to the conversation, or are you just going to keep screaming about the sky falling?

  22. Sorry Lloyd. My clarification was addressed to Sheldon Levin and his question about the meaning of the subject line.
    Your comment Lloyd is not welcome. Pointing out that Republicans and non-partisans and objective commenters are predicting a recession is not helping fan the flames of The Vast Left-wing Media Conspiracy, so leave off will you. Facts are not helpful in mythmaking exercises.

  23. 1) NAR housing stats are next to useless, they’ve been completely wrong every step of the way through the housing debacle
    2) existing home sales include foreclosures. That’s right, when the bank seizes your house, that counts as a sale. Thus, be wary of stories proclaiming a “turnaround” in housing based on an uptick in existing home sales. It may just be an increase in foreclosures. Also distorting the figures are REO (Real-estate owned) sales, which is when the bank that has foreclosed on your house dumps it on the market for whatever they can get.
    3) Canadian mortgage law, BTW, is vastly more lender-friendly than the US, where it is borrower friendly. Many US banks are holding mortgages that are 12-18 months in arrears and still pretending they are performing loans. In Canada, if you get 3 months behind on your mortgage, your bank will have a “Power of sale” sign on your lawn. In the US it takes an average of 18-24 months to foreclose. In Florida, where you need to file a foreclosure application with a judge before starting the foreclosure proceedings, there is an 18-24 month line-up just for a court date, so there are many dodgy loans there that are still at least few years away from being foreclosed.
    Now, as to oil, that Tipo field offshore brazil is at least ten years away from producing a single barrel of oil. Offshore oil is expensive, and takes a long time to develop. Tuzo Wilson, the great Canadian geophysicist, once said that it is physically impossible for us to ever run out of oil. We have, however, already run out of $5 oil and $10 oil and likely $30 and $40 oil, but we will never run out of oil.
    Also, high oil prices did more to cut greenhouse gases than ten Kyoto plans. High prices cause alternatives to become economic, and cause demand destruction. Oh, almost forgot, that’s Adam Smith’s invisible hand at work, which of course, is bad because it doesn’t support the expansion of government through hare-brained Green Shift plans.

  24. it’s about playing fast and loose with the technical truth by the MSM since GWB became POTUS….
    …I know exactly what you mean. It has been infuriating watching the left wing owned media distort what PGWB has been saying. We know that he is smart in his policy choices.

  25. Pete, you want to believe the wheels haven’t come off the economy, fine. Go for it.
    Basic math: you can’t have tax cuts, spending increases and a war at the same time. You can’t deregulate financials without some Wall Street sharpies figuring out a way to screw the rest of us out of a lot of money. Yes, it’s unfair to blame Bush for this, and I’m not doing that. It goes way back to Reagan but the Clintons and the Dems were just as eager to allow the banking system to do every trick in the book to keep the tech bubble, then the housing bubble, going. Too bad Bush wasn’t smart enough or string enough to do anything about it.

  26. Pete, you want to believe the wheels haven’t come off the economy, fine. Go for it.
    Basic math: you can’t have tax cuts, spending increases and a war at the same time. You can’t deregulate financials without some Wall Street sharpies figuring out a way to screw the rest of us out of a lot of money. Yes, it’s unfair to blame Bush for this, and I’m not doing that. It goes way back to Reagan but the Clintons and the Dems were just as eager to allow the banking system to do every trick in the book to keep the tech bubble, then the housing bubble, going. Too bad Bush wasn’t smart enough or strong enough to do anything about it.

  27. Kate:
    I’m on your side, so please don’t make a fool of yourself (and all of us) by implacable insistence a recession in the US is impossible.

  28. marvell, that’s not what Kate is doing. Pay attention. Since GWB took office, the media has been preaching that a recession is about to hit. It gets tiresome. Every bad news story about the economy gets front page headlines. Every good news story gets buried. This is no different. It takes six months of negative growth to classify us as being in a recession. How many months have been recorded negative so far? Zero. That means we have to have six months of negative growth for us to be in a recession. Which means the media should all just shut up until March of 2009. The whole thing is just like global warming. Record highs recorded in Florida make front page news. Record lows recorded in China, South Africa, Argentina, Chile, Australia, and more get suppressed. I’m not buying into the hype, I’ll wait and see the results for the next few months first. Once I see job layoffs in the hundreds of thousands, I’ll believe we’re recession bound. But when a bunch of non-existent money gets erased in a day of trading on wall street, that’s nothing to panic about.

  29. …or maybe the economy really has been shaky since 9/11, or at the very least, unsustainable since it was fueled with loans people couldn’t afford.
    Seems to me that you don’t go from “one of the most economically prosperous periods in US history” as Kate says, to the brink of financial system implosion in such a short period, if the fundamentals of the economy are sound.
    Kate makes a point from time to time, but now would be a good time for her to concede that she was wrong on an issue. It takes a strong person to stand behind their positions and principles, but it takes a stronger person to put aside their pride, admit they’re human and acknowledge an error it judgment.
    Come on, Kate. It’s not the end of the world, and I doubt your readers, and certainly myself will fault you for not being right in every circumstance. Clearly, your optimism about the US economy has been misguided. Even your staunchest supporters are pointing that out.

  30. You can call it what you like, but whatever it is, it’s damn scary, it’s already cost a lot of us a lot of money, people are getting laid off all over and it’s been shaping up since at least the summer of ’07.
    These are not good financial times.

  31. “Too bad Bush wasn’t smart enough or strong enough to do anything about it.”
    Bush sounded the first warning in April 2001. He issued 17 warnings this year alone before the you know what hit the fan. Even though we’re supposed to believe that he’s turned the USA into a dictatorship, he couldn’t force Congress to do squat – something about 3 equal but separate branches of government.

  32. Sorry, Pete – I am paying attention and she’s basically making her opinion a hostage to fortune when the odds now look pretty long against her. I know that part of it is a comment on the media, but she’s starting to look stubbornly resistent to reality – as her comment is also implicitly a position that the media is wrong.
    I won’t scold you back.

  33. Look ! If you keep saying, all summer long —
    ” IT WILL BE FRIGGIN COLD TOMORROW”
    and keep on saying it, over and over – you will be absolutely correct. Once the inevitable winter comes.
    It took 32 quarters for the naysayers to be right. About a 0.300 batting average. One would think the media should be benched permanently !!
    George did some good, some bad in his day. Just like all the others.

  34. And besides, the Dems have had control of both houses for two years – so what’s the problem ?

  35. [NEW YORK — — International Business Machines Corp. on Wednesday reported preliminary third-quarter earnings that beat analysts’ expectations, and it affirmed its full-year profit outlook, sending shares up 4 per cent.
    IBM said third-quarter net income rose 20 per cent to $2.8-billion (U.S.), while earnings per share from continuing operations rose 22 per cent to $2.05. Revenue rose 5 per cent to $25.3-billion, including 3 points from currency benefits, IBM said] Reuters

  36. that’s not possible ron, don’t you know we’re in a recession? Stocks are going down down down! That must be old news from 2007!

  37. TORONTO – The Toronto stock market jumped over 200 points Wednesday, snapping a vicious five session losing streak at the end of a whipsaw trading day.

  38. Kate’s bait has caught a lot of people on it. heh.
    But there is an expanded story on bloomberg.com using the same resale numbers.
    One of the good lines is “Vulture investors buying foreclosed homes are likely the key driver of the rise’… blah blah.
    Then later they point out that the Western US region had the biggest jump in pending sales at 18.4%.
    Gee, I wonder how all those affluent, sophisticated redneck investors from the rich Canadian West buying up property in the US like being referred to as ‘vulture investors’?

  39. Lloyd one question: How long did it take for the TSX to reach its recent high point? There was no fundamental reason for the TSX to reach those heights and thus its recent fall simply brings it closer to its real value. Truth be know for too long it has been too many pension funds chasing too few stocks.

  40. Kate Said:
    “LOL… that was the reaction I was anticipating. Considering the precious few who have proven themselves capable of understanding what the subject line really refers to.”
    I’m still waiting for you to explain what the subject line refers to. When you use this subject line it has always appeared to me to be a sarcastic headline to introduce some copy and pasted news clipping about evidence of strength in the economy.
    Am I right?

  41. KATE:
    Higher demand brought about by lower prices. Who could have predicted such a thing?
    Nicely said.

  42. Pete- Are you daft? Upswing? Even at our previously enjoyed rate of growth it would take years to get back to where we were. But all bets are off now, the wheels have come off and it’s going to take a long time to get them on again. Sorry, but just have look at the ticker from the last 80 years.

  43. Related financial insight:
    AIG Insurance has already received something like $57 billion as a bailout for mortgage loans they were required to cover under federal law.
    It’s ALL gone ….. today they requested another pile of cash.
    Where do you think it is going?
    Hint: Wads of cash plus dirt cheap fire sale stock prices ….

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