Worst Housing Number in Decades: What Is the Wall Street Media Smoking?

by: Avery Goodman

The housing numbers are as bad as they could possibly be. They show year-over- year housing starts to be down by 45.2% from May 2008. I cannot recall the numbers, but, if memory serves me, this decline is of the same magnitude as the housing decline which occured during the Great Depression of the 1930s.

Housing sales always are greater in April than in February. Furthermore, people almost always buy more houses in May than in April. The fact that they repeated that pattern in 2009 is not surprising. It's been happening since the days of the Roman Republic.

The real news is that housing starts are deeply down year over year. On top of that, we must consider that fact that 2008's numbers are way down from 2007, and 2007's numbers were way down from 2006. Housing starts in May, 2006 were running at a seasonally adjusted annual rate of 1,957,000 (www.census.gov/const/newresconst_200605.pdf). In other words, since the height of the housing market, housing starts have fallen so deeply that they amount to only 27% of what they were 4 years ago. That is very bad news and it justifies a deeply downward move on the stock market. Frankly, it is surprising that the DOW and S&P 500 didn't fall a lot lower than they did.

However, forget about all the doom and gloom of reality! Enter the Wall Street spinmeisters. Don’t bother them with reality. Here is the fantasy...

Bloomberg writes: “Housing starts jumped 17.2% to a seasonally adjusted annual rate of 532,000 units in May, up from April's figure of 454,000…”[i]

Marketwatch wrote:“Housing starts bounced back with a vengeance in May, rising 17.2% to a rate of 532,000 on a seasonally adjusted annual basis”[ii]

No, I am not making that up. I’ve given you the citation and you can read it for yourself. As ridiculously stupid as that is, they really did write “…bounced back with a vengeance…”.

But, no one beats Wall Street’s big bank analysts at the exceptional skill of being out of touch with reality.

Zach Pandl at Nomura Securities in New York, for example, explained: "This (housing) starts report is actually very encouraging…”[iii]

What kind of weed are these people smoking?

This is a horrible economic news week so far. To add to the bad housing numbers, the Federal Reserve reported that industrial production fell 1.1% in May from April and, in an unusual twist, admitted that this news was “worse than expected.” Six Flags, which owes billions of dollars to its creditors, has filed bankruptcy. Extended Stay Motel chain, which owes billions more, joined them in bankruptcy court.

The most frightening thing is that this is probably only a first taste of things to come. The green shoots are becoming impossible to find, if there ever were any.

Disclosure: Neither long nor short on anything mentioned in the article.