The Other McCain

"One should either write ruthlessly what one believes to be the truth, or else shut up." — Arthur Koestler

VIDEO: Hey, the Economy Sucks

Posted on | June 29, 2011 | 9 Comments

In this Bloomberg TV interview, Mark Vitner, senior economist at Wells Fargo Securities, doesn’t really have any good news and says he expects housing prices to decline another 7% in the next year:

By the way, I’m not a big fan of using “consumer confidence” as an economic indicator, as if mere mood were a tangible factor. The underlying economic reality is far more important than how people feel about the economy, yet we often see financial journalists writing articles that suggest recessions are caused by people feeling discouraged or pessimistic.

The Dow Jones Industrial Average gained 145 points Tuesday — good news, right? Yeah, but it closed at 12,188.69. That’s actually below the closing price (12,307.35) on June 13, 2008. So the stock funds in your 401(k) are right back where they were three years ago, and substantially below the DJIA peak of 14,093.08 in October 2007. Meanwhile, home prices are at their lowest point since 2003 and projected to go even lower. And unemployment, of course, has been 9% or higher for 23 of the past 25 months.

Given all these indicator of a bleak economic reality, it is therefore idiotic for financial journalists to pretend that low “consumer confidence” is mysterious or irrational.


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