Another Political Recession That Has Not Happened…
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This is not aimed to be a political post, but to point out an obvious trend that is affecting us all in the real estate world.
First, whether you like President Bush or not, we know the press does not. They have fallen in love with Obama to the detriment of Hillary, McCain, and your pocketbook.
Why your pocketbook? Well for one thing the economy has turned into the major issue of the campaign. For Obama to win the worse the Bush administration leaves the economy the better for him. Plus talking about a recession is good business for the media as it sells advertising.
And we all know the negativity has hurt housing sales. The media constantly beating the drum of bad times does not inspire young couples to buy homes or older families to move up. We can all agree to that.
So this tidbit from US News caught my eye. Even old Greenspan is baffled why we are not in a recession and the numbers are holding solid in low growth mode.
Now I went back and checked the numbers for the past 50 years and didn’t find a single case of a recession—as calculated by the National Bureau of Economic Research—that started with or contained two straight quarters of positive GDP growth, much less three quarters. In a recent interview with the Financial Times, former Federal Reserve Chief Alan Greenspan admitted he was puzzled that the economy hasn’t fallen off a cliff, given the housing crisis, credit crunch, and oil price surge. He told the FT: “A recession is characterized by significant discontinuities in the data…. It started off that way—there was a period of sharp discontinuity from December to March. But then it stopped…. No one knows how this tug of war will end—specifically, whether the financial crisis will end before it drags down the real economy.” Capital Commerce (usnews.com).
One thing I do know from past history is, the press can not talk down the economy for long. Once the elections come in November they will start releasing good news about the economy. Then the drumbeat will start talking about the turnaround. Forget that the economy did not tank in the first place, that is in the past. Just we are doing better now.
And the good thing is that will help sell homes.
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Comment by Jonathan Blackwell on 1 June 2008:
Alan Greenspan knows exactly why the economy isn’t in recession. If you devalue the dollar you fluff exports and artificially inflate growth. Part of the reason he quit was because he didn’t agree with this administrations dollar policy.
Comment by Kirk on 2 June 2008:
Don’t be so quick to call for a turnaround. If you think we are through the credit crisis and that growth is around the corner, you are sadly mistaken.
With prices on the rise and corporations with little ability to raise prices, profit margins will shrink. Once this happens, corporations cut. All of this on top of a slowing consumer and housing market poised for greater pain ahead then you have trouble ahead.