With all the debate over whether or not we are in a recession or whether or not the worst of the housing and credit crises is behind us, it may be best to ignore the talking heads and look at the data. Unfortunately the data is not good.
Tuesday we where hit with record poor housing numbers and a continued decline in consumer confidence. The S&P Case-Shiller Home Price Index for March showed “continued broad based declines in the prices of existing single family homes across the United States.”
Their National Home Price Index recorded a 14.1% year over year decline for the first quarter of 2008, the largest decline in the 20-year history of the index. The 10-City composite dropped 15.3% year over year and the 20-City composite dropped 14.4%.
“The steep downturn in residential real estate continues,” said index committee Chairman David M. Blitzer in a release. “There are very few silver linings that one can see in the data. Most of the nation appears to remain on a downward path, with 19 of the 20 metro areas reporting annual declines, and six of those now at negative rates exceeding 20%.”
Adding to the bad news was another multi-year record low in the Conference Board’s Consumer Confidence Index. The index dropped to 57.2 for May, down from 62.8 in April, a 16-year low. Director of The Conference Board Consumer Research Center Lynn Franco said in a release, “Weakening business and job conditions coupled with growing pessimism about the short-term future have further depleted consumers’ confidence in the overall state of the economy. Consumers’ inflation expectations, fueled by increasing prices at the pump, are now at an all-time high and are likely to rise further in the months ahead. As for the short-term outlook, the Expectations Index suggests little likelihood of a turnaround in the immediate months ahead.”
Despite the bad news equity markets rallied Tuesday thanks to a drop in crude oil back below the $130 level. The near 70-point rally in the Dow Jones Industrial Average was most likely a reaction to crude and profit taking from last week’s huge decline. In the past, equities rallied on bad news because the market saw it as a sign the Fed would cut rates but the minutes from the April Federal Open Markets Committee (FOMC) meeting indicated a new found concern for inflation.
Tags: Case-Shiller Home Price Index, Consumer Conifdence, FOMC
