We were NEVER in a recovery

This morning, I received an email from the brilliant and humble economist, Richard Wolff, author of Capitalism hits the Fan. Using one simple chart from the EPI (the non-partisan Economic Policy Institute in DC), he elegantly and concisely describes why that which the media tends to refer to as a recovery, has never felt like a recovery to most of the people in this country. 

I constantly rant and write about the fact that the main economic condition of individuals has never recovered (or in other words, banks who got trillions of dollars of back-up don't like to share), so the notion of talking about a 'double dip' recession is illogical. His piece shows that only certain corporate profits (and hence, their stock prices) regained some ground. This has translated into a few positive GDP figures (though in true political shell-game fashion, these keep being revised downward) which in turn have been used by Obama, Geithner, Bernanke, and others vested in their own egos, to justify the bailouts, subsidies, Treasury Department and Fed actions in 2008 that apparently saved us from some even more horrific fate. Yet, every measure of daily economic life: housing, jobs, health care per cost, personal bankruptcies, etc - has only shown deterioration since. 

Here's his piece. What do you think?

Non-recovery News: New Home Sales: 4 decade lows

On May 26, the Commerce Department released a peppy statement about new home sales figures. New single family home sales had risen 14.8.% in May vs. April to 504,000 units, an increase of 47.8% since April, 2009. 

“The rise in new home sales is good news for this important sector of the economy,” said Commerce Department Under Secretary for Economic Affairs Rebecca Blank. “The growth in sales partially reflects the impact of the homebuyer tax credit.  But low mortgage rates, affordable prices, and strong job gains have also contributed to the firming of new home sales and should support sales in the coming months.”

Fast forward three months, and there were no such glorifying press releases for this month's New Home Sales Figures. Because they were AWFUL. New Home Sales for July dropped by 12.4% compared to June, to 276,000 units, their lowest level since 1963 when the Commerce Deparment started tracking them. Now, even if you believe that the rosy figures a few months ago were accurate and related to expiring tax credits, these more recent figures, coupled with yesterday's existing home sales figures, are more indicative of reality.

In other non-recovery news, U.S. durable goods orders for July only rose slightly, by 0.3%. If you take out all the orders for commercial aircraft (read: private contractors headed for the Middle East), the figures were down 3.8%. 

I don't like to be right about this, but I've never said we were in a recovery, slow or otherwise, so we're not in a double-dip recession as many pundits are now exposing - we've been unfortunately, mired in a slow, painful deterioration marked by the occasional artificially or federally inflated economic indicator that doesn't represent the personal economies of most Americans.

Non-recovery News: July Existing Home Sales Plummet

With the summer approaching an end, and August a traditionally slow month for home sales even in the best of times, the National Association of Realtors (NAR) released their figures for July existing home sales today. They were ugly, down by 27.2%, from June (which was revised downward from initial estimates), 25.5% from last July, and setting a dramatic new record low for this index that was created in 1999.

Single family home sales are at their lowest point since May 1995. The NAR suggested the silver-lining in their report was that the homes that are selling are doing so at higher prices. That's because the more expensive homes purchased by the wealthiest buyers tend to skew the average. Separately, the amount of time that houses are remaining on the market increased to 12.5 months from June's rate of 8.9 months. That's a very worrying number.

One of the more prevalent reasons cited for this plunge is that the government's tax credit for home buyers disappeared. But, while losing the additional $8000 tax break per home may certainly be a factor, the underlying problem remains the fact that most people (millionaires and billionaires excluded) can't buy new homes because:

a) They can't afford the loss they'd have to take on their current home.

b) They can't get new credit, or negotiate old credit despite low prevailing mortgage rates.

c) They don't have the job stability, or increasingly - a job at all, to consider taking on a new mortgage.

Unfortunately, there is little on the horizon to indicate this will change any time soon.