Now that I’ve recovered from turkey overload, it’s time to digest last week’s economic data turkeys.
Case Shiller was out with more late data last week. I say late because the data includes sales only through September. Call it the curve behind the curve. Not only is it late, the index is an average of the 3 months of data preceding the end of September, which causes another lag of 1.5 months. The data they report now actually represents the condition of the market as of August 15 on average, which may or may not represent where things are today, nearly 4 months later.
The Case Shiller showed another increase, reflecting the weight of rising prices in June while camouflaging what occurred in July and August. Prices actually topped out in July, and tanked in August, September, and October according to the NAR’s more timely, unsmoothed data.
The Case Shiller indexes add nothing to our understanding of the market, yet the media cites them as having enhanced credibility due to “academic rigor”. Nonsense! Nothing could be further from the truth.
Just to make sure, I checked the cities in Case Shiller’s 10 city index on Housingtracker.net, which tracks real time listing prices. Since we have the NAR data through October, I wanted to see how the market did since then. This data was as of November 23.
It’s a pretty picture. Pretty bleak. It supports my contention that the first time home suckers credit not only inflated pricing data but also pulled so much demand from the future that the result was a demand vacuum in the present. My experience in watching the listings data for several years is that it closely tracks the sales data and therefore is a reliable leading indicator of the current state of the market.
The coverage of the housing market in the media and the action of the stock prices in that sector is farcical. Unfortunately, in the end no one will be laughing.
By now you have probably heard that the ConCon Con, the Conference Board’s Consumer Confidence Index, rose to 49.5 from an upwardly revised 48.7. The index is still buried at historically low levels. The uptick was due to a rise in expectations, and as the fine folks at Barfing.com pointed out, even that rise is an anomaly. Here’s how they explained it.
“In general, consumer expectations of things getting better have fallen in November. Instead of people believing conditions will get worse, consumers responded that conditions will remain the same. The confidence index takes conditions holding the same as a positive reading. So even though conditions today are outright bad, staying at this level is looked at as a good end result.”
The Present Situation index is at the lowest level since 1983. That means that the Christmas present situation is pretty poor. Unlike the economic establishment, the general public, Joe Sixpack et. al., gets it.
The chart does not include the latest data point but you get the idea.