Recovery is in the Eye of the Beholder
The notable disparity between headlines, hard data and harsh realities
Check out this study in modern media, from Tuesday morning:
Bloomberg: Home Prices in 20 U.S. Cities Rose 0.3% in JanuaryHome prices in 20 U.S. cities unexpectedly rose in January, indicating the housing market is stabilizing as the economy expands. The S&P/Case-Shiller home price index climbed 0.3% from the prior month…
MarketWatch: U.S. Jan. Case-Shiller Home Prices Fall 0.4%Home prices in 20 major U.S. cities fell a not-seasonally adjusted 0.4% in January compared with December, according to the Case-Shiller home price index released Tuesday…
Pardon the language, but it’s all BS. With enough political pressure, preconceptions, seasonal adjustments and ambiguous data, you can print whatever you want… so long as the masses don’t bother to check the source and think for themselves. The latest batch of housing data is so ambiguous – as evidenced above – that you can make it tell whatever story you want.
So what’s really happening in the housing market? Well, just as you’d expect — not a whole lot. Some states saw a marginal increase in home prices in January, while some saw an equally small decline. In total, prices fell just a bit for the fourth month in a row.
This morning, much of the same:
CNN: “Finally! Job Growth Returns”
The U.S. economy gained more jobs in March than any other month in the last three years, according to a government report released Friday.
Indeed, jobs were added in March. But are we better off? The first clue is the unemployment rate, which held steady at 9.7%. The “underemployment rate,” which includes the unemployed, those working part time for economic reasons and people who want work but have given up looking, actually increased. It was 16.8% in February. Now it’s 16.9%. Those discouraged workers — who have given up their job search in frustration — are particularly interesting. There were 308,000 this time last year…now there are over a million.
And the jobs added in March…are they good ones? The federal government added a net 48,000 employees — almost entirely Census hires, whose employment is all but guaranteed to end later this year. “Employment services” made up another huge chunk of the monthly gain. That’s a nice way of saying temp jobs, which rose by over 40,000. We have no beef with taking a temp job in hard times — even for the Census. But are they good jobs…the kinds that foster growth, both personal and economic?
Even those lucky enough to have a job are working for less. The Labor Department quietly admitted in its report that average hourly earnings fell 0.1% in March. That hasn’t happened since at least 2006, when comparable records began. As a nation, we’re working longer hours, too…up an average 0.1 hour in March, to 34 a week.
We’re not trying to rain on anyone’s parade. But there’s something to be said for business media: It’s their job to make you feel like something big is happening. Better yet, to make you feel good… maybe good enough to solicit their advertisers and renew your subscription. If you’ll venture as far as Noam Chomsky’s school of thought, it might even be their job to keep you from drawing critical conclusions… the kinds that threaten the status quo.
Both the major data releases this week – the latest home price index and today’s jobs report – warrant a critical approach. Home prices have bottomed out in some regions. Jobs have been added in some sectors. But housing has not rebounded in most places, plus the shadow inventory of soon-to-be foreclosed homes looms large in the not too distant future. And the quality, let alone sustainability, of new jobs remain suspect.
Better to keep expectations in check and be pleasantly surprised… rather than foolishly disappointed. The Great American Recovery has yet to truly prove itself.
Ed note: For more on what you can do to protect your investments from mainstream chicanery see: The Great Recovery Rip-Off.
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