Thursday, October 26, 2006


Economy tanking as home sales INCREASE

Home Prices Plunge by Most in 35 years screams the headline over the AP report by AP Economics Writer, Martin Crutsinger:

“The median price of a new home plunged in September by the largest amount in more than 35 years, even as the pace of sales rebounded for a second month.”

Is there any chance at all that the lower prices of new homes may have something to do the pace of sales being up? Any chance that classic supply and demand is at work here?

Later we read the obligatory: “The debate is whether the slowdown will be enough to push the country into an outright recession.”

What slow down? You’re reporting that the pace of sales is UP!! Back in January, this was the big question according to Mr. Crutsinger:

“The five-year housing boom is showing increased signs of cooling, and that's likely to mean slower growth for the entire national economy. The big question now is whether home prices will come crashing to Earth with even more severe consequences. Cooling U.S. home sales may crimp economy (January, 2006)”

Buried in today’s article is this bit of news:

“In other economic news, the government said that orders to U.S. factories for big-ticket manufactured goods, powered by a huge jump in demand for commercial jetliners, soared in September by the largest amount in more than six years.”

But less than a month ago, a Martin Crutsinger report was headlined: Orders for Big-Ticket Goods Drop

which was important because it “…could be seen as a worrisome development given that economists are looking for business investment to help cushion the economic slowdown that is occurring because of a cooling housing market and smaller advances in consumer spending.”

Mr. Crutsinger doesn’t bother to tell us the significance of the INCREASE in orders for same.

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