They say stocks are down today because the Pending Home Sales Index of the National Association of Realtors declined in June. But They say a lot of things. The market could as easily be down because investors are nervous about (over)valuations, Europe, Asia, CEOs who accidentally joke about the truth, etc. What is undeniable is that more than five years into the recovery, house sales outside of a few golden places such as Seattle have yet to find that “new normal” that They kept promising us:
The 406,000 single-family houses sold in June has no similar point of comparison this far into a recovery in the post-Depression era. The rate of home ownership is also down:
Take out the abnormality of the housing bubble and housing is still not playing the important role it once did in the economy. In such an environment, there’s only so much room for, say, online real-estate listings outfits. Fortunately, Seattle’s Zillow was the acquirer in this deal.
The reasons are not difficult to find. The typical household’s net worth has declined 36 percent since 2003. Slow but steady unemployment growth still leaves a major jobs gap nationally, and the weakness is even more pronounced when you look deeper into states and metro areas. For those with jobs, wages are typically stagnant or falling. Employees who are cowering are less likely to take out a mortgage.
In the 2000s, Alan Greenspan and the bankers did a masterful job of concealing the hollowing out of the middle class, thus allowing all the Wall Street looter behaviors and policy hustles to go unnoticed. Everybody could buy The American Dream (a house, not life, liberty and the pursuit of happiness). Now, the hangover continues. So do the policies that so wounded the economy. I guess that’s the new normal.
Monday Reading: Wishful thinking about natural gas: Why fossil fuels can’t solve the problems created by fossil fuels | Naked Capitalism
Today’s Econ Haiku:
Ol’ Jim’s knee-slapper
But humor is hard to find
When you’re cowering