Spot The "Housing Recovery" Disconnect(s)
Confused about the latest disconnect between reality and propaganda, this time affecting the (foreclosure-stuffed) housing "recovery" which has become the only upside that the bulls can point to when demonstrating the effectiveness of QE now that the latest attempt at economic recovery has failed miserably both in the US and globally? Gluskin Sheff's David Rosenberg is here to clear any confusion.
The sputtering housing recovery
The 14% slide in the S&P 500 Homebuilding index from the March cycle highs may be telling US not to hold our breath over a near-term turnaround, either (the group is actually no higher now than it was in mid-October1). And the housing indicators are part of a bigger picture of a sharp slowing in the pace of overall economic activity. Consider that three months ago, 65% of the incoming economic data were coming in better than consensus views. Two months ego, that share of 'beats" came down to 47%. And in the past month, the share of economic data surprising the consensus to the high side has fallen to a mere 36%.
- Household employment (-206k in March. the steepest decline in well over a year).
- Real retail sales (-0.3% in March, down for the second time in three months).
- Manufacturing production (-0.1% and also down in two of the past three months).
- Core capex orders (-3.2% in February, and again, down in two of the past three months).
- Single-family housing starts (-4.8% in March and negative for two of the past three months as well.
- New home sales (-4.6% in February).
- Philly Fed for April down to 1.3 from 2.0.
- NY Fed Empire manufacturing index down to 3_05 from 9.24.
- NAHB Housing Market index down to a six-month low of 42 in April from 44.
- Conference Board consumer confidence index down to 59.7 in March from 88.
- University of Michigan consumer sentiment down to 72.3 for April from 78.6, the lowest in over a year.
- Conference Board leading indicators down 0.1% in March, first decline in seven months.
Source: Gluskin Sheff
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