Home Sales and Unemployment. We Are Stuck.

There really is not much to say about today’s reports, other than to acknowledge that they indicate continuing malaise.

Sales of existing – as opposed to new – homes edged up 7.6% in August. Normally that kind of growth would deserve some applause, but August’s improvement was preceded by the devastation of July when sales had dropped by 27%. Practically anything would be an improvement after that. Plus even with the gain August’s number was the second worst on recored. So we cannot draw any conclusions from the data other than to breath a sigh of relief. At least things didn’t get worse.

Obviously the housing market is stuck in the doldrums. It will stay there. The inventory of homes for sale is huge compared with demand. That means prices will remain weak. Sales will only recover when household cash flows are strong and expectations change. People have to feel secure making the long term commitment needed to pay for a house; and they need to stop staying out of the market in the hope that prices will fall further.

Oh. And they need access to credit.

Currently all three of these factors are working against real estate and are likely to stay that way for a while. I think we have another year or two of trouble ahead in housing, and that prices are set for a renewed decline. The next 24 maonths will be a good time to buy if you have the cash.

As for unemployment. What can I say?

This morning’s numbers are very disappointing. The new claims for unemployment assistance went up instead of down. The rise was 12,000 back up to a weekly total of 465,000. That’s simply not good. Plus it puts and end to the very modest, two week, improvement that many people were seeing as the long sought after turn around in the job market. There is no need to dwell on this. Suffice to say nothing has moved sufficient for us to cheer up. Unemployment remains our biggest single economic challenge, and there appears to be no collective political will to fix the problem. We are stuck. And given the political atmosphere we will remain stuck.

That’s foolish, but it seems to be what the voters want. Irrational anger is not a policy. Nor is a choice made by people seeking solutions. Until the anger is vented ,and sense returns, I just don’t see how we can expect, as a community, to address our problems.

Then again, as the awful Margaret Thatcher said of Britain: “society doesn’t exist”. Those words sum up contemporary America. The lack of cohesion and commitment to a common cause is pernicious. The relentless pursuit of individual goals has undermined the attachment to any concrete public or shared goals. We have divided into a giant set of small islands each of which perceives itself surrounded by the infested and antagonistic waters of “the others”. We have been divided in order to be conquered, and we acquiesced in that process. What we have left is incoherent anger and a distorted sense of isolation. We scream that no one is looking out for our interests. Yet we forget that the precise premise of individualism is that no one will look out for anyone else’s interests. Common goals and values are cast aside in such a world. And that is the world we constructed, happily, over the last thirty years. That, in the logical denouement of that process, large numbers of people realize they were sold a bill of goods should not be a surprise. They are hapless victims of their own credulity.

I suppose I should feel sympathy for them as they awake from the years of illusion. But I don’t. Some of us knew this was coming and it is very hard now to maintain empathy, or summon up sympathy for those who enabled the takeover.

I feel deeply ashamed that America abandoned its poor, its tired, and its various other weaker souls as it sold out to the free market magic. Their lives were devalued materially. They were said to be lazy or leeches. Such is always the way. Anyone familiar with the Britain of the late 1800’s recognizes contemporary America and what is has become. Those who followed the leadership into this malaise were devalued morally. They debased their community in order to scramble for themselves in the false hope that they could climb to the pinnacle. What they achieved with their labor was to build the pinnacle higher and out of their reach. Inequality grew. Those on top rose higher. Those underneath fell away.

Yes we were divided.

And, yes, it was deliberate.