Wednesday, October 28, 2009

Wall and Main go separate ways, again

While bonuses and champagne flowed in September and October, with Mr. Market beating the usual seasonality softness to rally highs as rare as rare earth, down on Main Street, things were, well, down on Main Street.

Consumer Confidence in U.S. Unexpectedly Decreases (Update2)
Oct. 27 (Bloomberg) -- Confidence among U.S. consumers unexpectedly fell in October for a second month as Americans fretted about a lack of jobs.

The Conference Board’s confidence index dropped to 47.7 from a revised 53.4 in September, a report from the New York- based private research group showed today. A measure of employment availability deteriorated to a 26-year low.

The share of consumers who said jobs are plentiful dropped to 3.4 percent from 3.6 percent. The proportion of people who said jobs are hard to get increased to 49.6 percent, the highest level since May 1983, from 47 percent.

The proportion of people who expect their incomes to rise over the next six months decreased to 10.3 percent from 11.2 percent. The share expecting more jobs fell to 16.3 percent from 18 percent.

Mounting unemployment threatens to restrain consumer spending entering the Christmas-holiday shopping season.

Buying plans for automobiles, homes and major appliances within the next six months all decreased this month, today’s report showed.
Well of course they did. Those who could took the stimulus hand-outs to upgrade clunkers and homes while the gettin' was good.

Meanwhile, Mr. Market today is clawing back its momentary reversal of fortune when that news came out, allegedly on the back of allegedly "improving" home sales.
An earlier report today showed home prices in 20 U.S. cities rose in August for a third straight month. The S&P/Case- Shiller home-price index climbed 1 percent from the prior month on a seasonally adjusted basis, after a 1.2 percent increase in July. Compared with a year earlier, prices were down 11.3 percent, less than the median forecast of economists surveyed.
Again, no surprise there. As mentioned just the other day, the Australian experience, corroborated by Goldman Sach's observations of the US experience, is that all the housing credit stimulus did was raise prices that were already unaffordable to most (whether because they didn't have the wherewithal or the credit to get in), not raise new roofs over new heads.


Guambat has borrowed so many pages from the WSJ that it is only fair that it is now running a story that parallels this post. Okay, maybe not so exactly as parallels, but Guambat never misses an opportunity to stroke his own ego.
Home Prices Rise, Yet Confidence Fades

Real-estate prices increased for the fourth consecutive month, but consumers are feeling more glum, a disconnect that shows how rising unemployment continues to weigh on households even as the economy improves.

Analysts warn that prices are being propped up by the government and may resume falling in the coming months as that support fades away.

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