The degree of cheerleading in the media, accompanied by doctored economic statistics by the Administration, is all an attempt to convince you that the economy is getting better. It is not! It is not even close to getting better.
Isn’t it amazing that we are talking about an economic recovery almost five years after the recession was declared over? Recoveries after recessions are usually over with in a few quarters, not five years. For those who believe in business cycles, it is time for another recession (except we still have not gotten out of the last one) to begin.
Here is a chart of housing. You know about housing because it is routinely heralded as being one of the industries leading the recovery. How can that be?
This chart is impossible to reconcile with the housing recovery stories that are being spun.
Focus on the blue line, single family housing starts. Do they look like they are going gangbusters?
Single family housing starts have barely surpassed the lowest level on the chart, way back in January of 1982. Look at the slope of the line after June 2009. Then compare its slope with that of any other post-recession period. Does that excite you as much as it excites the media?
Let’s use a different angle. The population today is larger than in 1982 which presumably means the need for homes is greater. That would suggest that the blue line would regularly be above the readings from 1982.
For those who didn’t live through 1982, it was a horrible time. In some respects it was worse than 2008 – 2009 for consumers or wanna-be home owners. Inflation was near 20%. Paul Volcker was in charge of the Fed and allowed interest rates to rise to multi-generational highs. Mortgage rates in 1982 were 15% or higher. Today mortgage rates are 3 – 4%. In which period would you expect housing to do better?
Comparing housing starts today with levels at the for one of the worst recessions in history is hardly fair. We are supposed to be five years out of our recession. The proper comparison would be to compare housing levels five years past the 1982 (or any other) recession with today’s levels. On that basis, the comparison is fair and the economy can be seen as VERY, VERY SICK!
H/T to RFII