What the hell is going on?
If there's one thing this last week has taught me, it's better to have a gun and not need it than to need a gun and not have it.
Clarence Worley
True Romance
When I heard about the new housing sales jump on CNBC I was a bit perplexed. Then Jonathan Miller cleared up the confusion
New Home Sales
“The Census Bureau collects new home sales based upon the following definition: “A sale of the new house occurs with the signing of a sales contract or the acceptance of a deposit.” The house can be in any stage of construction: not yet started, under construction, or already completed. Typically about 25% of the houses are sold at the time of completion. The remaining 75% are evenly split between those not yet started and those under construction. “
But before you all start celebrating for a dodging a bullet and lining up to throw chairs at the Grunt for being the wet blanket on the housing market I would like share this interesting passage from the New York Times.
The latest reading on home sales, released yesterday, contradicts most recent measures of housing activity, which generally indicate a slowdown. And, yes, manufacturers' fortunes are on the mend, but few besides airplane makers are celebrating.
It all means the economy is likely to end the year with a splash. But before you splurge on a new car, consider this: Many economists do not expect the party to continue, especially if the Federal Reserve continues taking the punchbowl away and raises interest rates. That could further slow the housing market, damp consumer spending and crimp corporate profits.
Indeed, the Organization for Economic Cooperation and Development said yesterday that 2005 growth would most likely settle at 3.6 percent, down from 4.2 percent in 2004. The organization also forecast 2006 growth at 3.5 percent, but other economists think that may be too optimistic.
"The two major concerns are the extent of slowdown in housing and how it can feed into growth and consumer spending," said Joshua Shapiro, chief United States economist at Maria Fiorini Ramirez Inc., a research firm in New York.
Many analysts, including Mr. Shapiro, say a housing slowdown is already under way. Along with rising interest rates and anemic job growth, any such drop-off could sap the economy next year - by just how much is still subject to debate.
Let's not forget jobs.
Analysts are eagerly awaiting the Labor Department's next jobs report, out Friday, and hoping the recent weakness will prove temporary. But they worry that job creation may turn out to be disappointing because of deep-rooted concerns about thinning profit margins, caused by, among other things, high energy costs.
"This is only a fear that has sprung up recently," said Mr. Shapiro of Maria Fiorini Ramirez.
Now regarding my quote from True Romance. I am not advocating people to stock up on 9mm Berretas. What I am just saying we should all exercise a strong sense of caution. None of us has any idea what is around the corner. All indications show it can be very good or downright nasty. I say we all err on the side of caution.
So get rid of your credit card debt and cut your expenses. Keep up your health insurance payments and start setting up a reserve fund. DO NOT TREAT CREDIT CARDS AS A RESERVE FUND! THEY ARE A LAST RESORT!
Perhaps this will pass with no more than a hush. Perhaps we will all laugh at the trouble this bubble talk has caused and wonder what we will do with the surplus of cash in our hands. But we won't know until it goes down and it will be too late to do anything about it.
Clarence Worley
True Romance
When I heard about the new housing sales jump on CNBC I was a bit perplexed. Then Jonathan Miller cleared up the confusion
New Home Sales
“The Census Bureau collects new home sales based upon the following definition: “A sale of the new house occurs with the signing of a sales contract or the acceptance of a deposit.” The house can be in any stage of construction: not yet started, under construction, or already completed. Typically about 25% of the houses are sold at the time of completion. The remaining 75% are evenly split between those not yet started and those under construction. “
But before you all start celebrating for a dodging a bullet and lining up to throw chairs at the Grunt for being the wet blanket on the housing market I would like share this interesting passage from the New York Times.
The latest reading on home sales, released yesterday, contradicts most recent measures of housing activity, which generally indicate a slowdown. And, yes, manufacturers' fortunes are on the mend, but few besides airplane makers are celebrating.
It all means the economy is likely to end the year with a splash. But before you splurge on a new car, consider this: Many economists do not expect the party to continue, especially if the Federal Reserve continues taking the punchbowl away and raises interest rates. That could further slow the housing market, damp consumer spending and crimp corporate profits.
Indeed, the Organization for Economic Cooperation and Development said yesterday that 2005 growth would most likely settle at 3.6 percent, down from 4.2 percent in 2004. The organization also forecast 2006 growth at 3.5 percent, but other economists think that may be too optimistic.
"The two major concerns are the extent of slowdown in housing and how it can feed into growth and consumer spending," said Joshua Shapiro, chief United States economist at Maria Fiorini Ramirez Inc., a research firm in New York.
Many analysts, including Mr. Shapiro, say a housing slowdown is already under way. Along with rising interest rates and anemic job growth, any such drop-off could sap the economy next year - by just how much is still subject to debate.
Let's not forget jobs.
Analysts are eagerly awaiting the Labor Department's next jobs report, out Friday, and hoping the recent weakness will prove temporary. But they worry that job creation may turn out to be disappointing because of deep-rooted concerns about thinning profit margins, caused by, among other things, high energy costs.
"This is only a fear that has sprung up recently," said Mr. Shapiro of Maria Fiorini Ramirez.
Now regarding my quote from True Romance. I am not advocating people to stock up on 9mm Berretas. What I am just saying we should all exercise a strong sense of caution. None of us has any idea what is around the corner. All indications show it can be very good or downright nasty. I say we all err on the side of caution.
So get rid of your credit card debt and cut your expenses. Keep up your health insurance payments and start setting up a reserve fund. DO NOT TREAT CREDIT CARDS AS A RESERVE FUND! THEY ARE A LAST RESORT!
Perhaps this will pass with no more than a hush. Perhaps we will all laugh at the trouble this bubble talk has caused and wonder what we will do with the surplus of cash in our hands. But we won't know until it goes down and it will be too late to do anything about it.
posted by Grunt at
9:51 PM
