As 2010 Comes to An End, Bad Economic News Continue
The old year is coming to an end and it still has plenty of bad news for the American economy.
The Americano
On Tuesday, the gloomy economic news came from two reports.
In one, the S&P Shiller index that measures property value, fell 0.8 percent from October 2009. It was the biggest year-over decline since December of 2009 and an indication that housing will remain a weak link in a recovering economy.
According to the Bloomberg News, the decrease in property value exceeded the 0.2 percent drop projected by economists.
The second bit of bad news came as the Conference Board reported that its index of U.S. consumer confidence declined to 52.5 in December on concerns of present and future job growth. Economists polled by MarketWatch had expected confidence to rise to 56.9.
“Consumers’ assessment of the current state of the economy and labor market remains tepid, and their outlook remains cautious,” said Lynn Franco, director of Conference Board’s consumer research center, in a statement.
The most depressing news, however, came on the home front.
According to Bloomberg News, a wave of foreclosures waiting to reach the market means home prices will remain under pressure in 2011, representing a risk to household finances. Federal Reserve policy makers this month said “depressed” housing and high unemployment remained constraints on consumer spending, reasons why they reiterated a plan to expand record monetary stimulus.
“We’ll remain in negative territory for several more months,” said Dean Maki, chief U.S. economist at Barclays Capital Inc. in New York, who forecast a year-on-year drop of 1.3 percent. “The housing market does remain weak and none of the recent data suggest a substantial pickup.”
The report showed that in 18 of 20 cities surveyed the median price of a home dropped, led by a by a 2.1 percent decline in Atlanta, and decreases of 1.8 percent in Chicago and Minneapolis. Denver and Washington were the only two cities where prices went up.
According to Bloomberg News, six markets, including Atlanta, Charlotte, Miami, Seattle, Tampa and Portland, Oregon, reached their lowest levels in October since prices started to retreat.
“The double-dip is almost here,” said David Blitzer, chairman of the index committee at S&P. Sales aren’t “giving any sense of optimism.”
The 20-city index was down 30 percent in October from its July 2006 peak.
The drop in prices represents a setback for housing after values recovered earlier this year, thanks to an $8,000 homebuyers’ tax credit that lifted purchases.
Bloomberg News added that reports earlier this month showed the housing market is stuck near recession levels even as the broader economy is recovering. Housing permits fell in November to the third-lowest level on record, while starts rose for the first time in three months, the Commerce Department reported Dec. 16.
TheAmericano/agencies
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