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According to
the head of America's largest and most profitable bank, it's onward and
upward for the U.S. economy:
"JPMorgan’s
Dimon Says U.S. No Longer Faces Risk of
Recession" (Bloomberg)
JPMorgan Chase
& Co. Chief Executive Officer Jamie Dimon said
the U.S. may no longer be at risk of another recession and the housing market
is nearing the bottom.
Huh? Were there
any facts involved in that assessment? Take, for example, Mr. Dimon's initial remark that "the U.S. may no longer
be at risk of another recession." The
following chart indicates otherwise:
(Hat
tip to Business
Insider.)
Then there is
Mr. Dimon's claim that "the housing market is
nearing the bottom." According to the real estate site Trulia, that is likely far from the truth:
"Are We
There Yet? Trulia’s Housing Barometer" (Trulia Trends)
Trulia's
Chief Economist takes a monthly look at new construction starts,
existing-home sales and the delinquency-plus-foreclosure rate to see how far
away we are from a normal housing market.
On the long
road of housing recovery, we’re all kids in the back seat wondering:
are we there yet? After years of bad news about the housing market,
it’s hard to remember what “normal” looks like.
This month Trulia kicks off the Housing Barometer, a quick review of
three key monthly indicators of housing recovery: new construction starts
(Census), existing-home sales (NAR), and the delinquency-plus-foreclosure
rate (LPS). For each indicator, we checked how bad the numbers got at their
worst, and then looked even further back in time, before the bubble, to
remind ourselves what “normal” looked like. We’re not
trying to predict what the new normal will be in the future –
we’re just eyeballing the past in order to put this month’s
housing data into context.
Here’s
what the February data, released last week, show:
— Construction
starts: 22% of the way back from their low in Apr 2009 toward their normal
level.
—
Existing home sales: 47% of the way back from their low in Nov 2008 toward
normal.
—
Delinquency + foreclosure rate: 32% of the way back from their high in Jan
2010 toward normal.
To get to a
single number that’s easy to remember and track over time, we just
average these three percentages together. If all three indicators were at
their worst, the barometer would be at 0%; if all were back to normal, the
barometer would be at 100%. The February 2012 data puts us at 34%: in other
words, the housing market is one-third of the way back to normal.
So, are we
there yet? No. We still have a long way to go. How long will it take us to
get there? Using the same method and measures, one year ago the market was
16% of the way back to normal, which means we’ve ticked up 18 points in
the past year. If we continue to drive at this same pace of 18 points a year,
we’ll get from 34% today to 100% in late 2015. Kids, sit tight…it’s
going to be awhile.
No need to be
concerned about reality, I guess, when you are a member of the TBTF contingent.
Michael J. Panzner
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