Several weeks ago I read an interesting article on this site about why the housing crisis and credit crunch was being overblown. Why? Because unemployment is still very low, and the US and world economy is fundamentally sound. Despite what everyone would have you believe, it is still the consumer who drives the market and not the other way around.
Sure, not all is great on consumer-land, but it isn’t as gloomy as the pundits would have you believe. They see catastrophe when there’s a down day and nirvana when the market is doing okay.
Today, the government reported a larger-than-expected increase in new home sales and big jump in durable goods orders. In other words, consumers are still spending, the economy isn’t that bad, and the housing market, although not as strong as it was, is still chugging along. That wounds pretty different from last week, when the sky was falling and the global economic system was in jeopardy.
So how do you filter the hype? Easy, look at yourself, your neighbors, your family and ask yourself how everyone is doing. Are you losing your home? Are your friends? Are you still able to afford that trip to Disney and buy a new dish washer? Because that’s where the real decisions will be made about this economy; not in the ivory towers of Wall Street.
Comments
GeorgeAtl
August 25, 2007
I don't know what circles you run in, but I know a lot of folks in their 30s who have good jobs and are pretty damn smart. Yet, they found themselves a year, 2 or 3 ago with young families and needing a stable home. They were forced to buy into a bubble and are now facing upwards adjusting ARMs and a falling market. If anything, I think that Wall Street has turned blind eye to the reality of main street and I have no pity on the folks in the real estate and mortgage industries who created this disaster for young folks.
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Sam Cass
August 25, 2007
No one needed to buy into the market with ARMs. This was their own doing. They bought houses they couldn't afford because they wanted the McMansion or the best location, etc. People were offered the easy solution of ARMs and other exotic products, and they took it. Whose to blame?
But I know many of these same people and most still have their jobs, are making more than ever, and will be able to afford the rate adjustments. I know even more that bought 3-4 years ago and are still sitting on a heap of equity.
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