I was listening to the ever bullish Larry Kudlow in New York a couple of weeks ago and he was saying that he believed the housing recession was over-blown and really limited to a few specific areas. No doubt Larry lives in a bit of a bubble, but one has to wonder how (or why) an economist could espouse this optimistic belief despite the hard cold data. Today we got the next instalment in the Case-Schiller housing Index showing us house price results to the end of March 2008.
A few months back I noted that the accelerating pace of house price declines suggested this Index would be “off scale” by the time we received the March-April data. This month the lower scale was infact extended to -16% in order to accomodate the read below the previous bottom of -15.
The decline in the S&P/Case-Shiller Composite-20 house price index accelerated once again in March to a 14.4% Y/Y drop, from a 12.7% Y/Y drop in February.
The Composite-10 index dropped even more from -13.5% Y/Y in February to -15.3% Y/Y in March.
19 of the 20 metro areas in the US reported annual price declines with six of the areas now at negative rates exceeding -20%. Charlotte, NC was the only major city to avoid year over year price declines, with home prices up there 0.8% on a year-ago basis.
Evaporating equity along with negative savings, soaring energy prices, and softening labour markets are all taking a significant toll on consumer sentiment.
This morning we learned that The U.S. Conference Board's measure of consumer confidence fell from 62.8 in April to 57.2 in May, which is its lowest level since 1992
While the present situation index fell from 81.9 to 74.4 this month. The expectations index is now sitting at 45.7, its lowest level since 1973.
The labour component of the survey noted that the balance of opinion between jobs plentiful and jobs hard to get deteriorated further from -10.8 in April to -11.7 in May, Along with rising jobless claims this means that we will likely see an upward jump in the May unemployment rate.
One-year-ahead inflation expectations continued to increase, jumping from 6.8% in April to 7.7% in May, as consumers struggle with the magnitude of energy cost spikes.
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