Bloomberg is spinning the news to juice the markets this morning. The Wall Street Juice Em Up before Q1 ends goes on unabated. Here's their reporting for new home sales in February this morning. "Purchases of new homes in the U.S. unexpectedly rose in February from a record low as plummeting prices and cheaper mortgage rates lured some buyers. Sales increased 4.7 percent to an annual pace of 337,000 after a 322,000 rate in January, the Commerce Department said today in Washington. The median sales price fell 18 percent, and unsold homes at the current sales pace were the fewest since June 2002."
Boy that sure sounds like good times are set to roll in the housing markets once again, eh? Notice how little context Bloomberg bothers with (investors don't need no stinkin' context!). The annualized rate (i.e., take the actual estimate and multiply it times 12) for new home sales was the second lowest rate since at least 1963 according to records at US Census. The lowest rate of sales was just 1 month earlier, January 2009. Indeed, the number is substantially lower than all of 2008, a rather pathetic year for new home sales! One more thing, the peak month, according to US Census, was July 2005 with 1,389,000 new homes sold at an annualized rate. So, the morning good news is that the new homes market is only down about 75% from the peak! Wahoo! Let's go shopping!
Wednesday, March 25, 2009
Saturday, March 21, 2009
More Long Term Income Data
Three graphs for future reference.
(1) The changes in nominal GDP for the United States from 1929 to 1947. I was interested in these data because of a graph that has been going around that shows total credit market debt as a % of GDP back to the 1920's in the United States. The image seems to indicate a level of indebtedness skyrocketing during the great depression to about 260% of GDP, currently the overall debt to GDP ratio is about 350%. The reason I got concerned has to do with the collapse of GDP from 1929-1933 as this first image shows. This means that the ratio of debt to GDP had only increased marginally during the "roaring twenties" from about 150% to about 160% of GDP. The spike is the result of bout a 50% decline in GDP from 1929-1933. Not an increase in the total amount of debt. This means the the current era (1973-present) is unprecedented in terms of the debt to GDP ratio at the start of the current downturn.
(2) I was interested in changes in prices during the depression and now. The graph above shows that CPI was relatively flat )well, a little wavy before and after WWI. Prices did decline after 1929, but they didn't collapse either. The present period (1973-2008) is unprecedented in terms of price increases.
(3) How have real wages (on average) kept up with inflation? See for yourself:
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