Last
week the Consumer Confidence Index fell, sending the stock market down 200
points in a day. This is absurd.
I
mean, as a consumer, yeah, I feel confident.
"Just a minute," you say, "this is a scientifically
designed, statistically accurate study."
Of
what? How consumers feel?
"No you idiot, how confident they are."
Isn't
confidence a feeling, or something unscientific?
"Not in this study. We give
it a number -- accurate to two decimal places!"
I have much to learn. Let's take a US consumer confidence survey:
Q1:
Do you expect to buy a big ticket item in the next three months?
Q2:
Do you feel your financial position is improving or getting worse?
Q3:
Do you get a warm fuzzy feeling that the economy is improving when you see
President Obama giving a speech?
Q4:
Do you believe in the existence of Green Shoots? How about the Easter Bunny?
Q5:
Do you feel that it is your patriotic duty to spend at least 99% of your income
to help the country's GDP increase?
Q6:
Do you feel more confident in Obama than Bush or less?
Q7:
What media channels do you use to glean information and form an opinion about
the world economy?
Q8:
Apart from FOX News.
Q9:
Are you likely to ever watch news on CNN, CNBC, ABC, BBC, CBC, NBC, or channel
2?
Q10:
Do you feel more confident that you don't need these news sources than last
year, or less confident?
Maybe
I'm being a bit unfair towards our North American cousins… but I doubt it.
One
reason that I brought this up was that the Building confidence index shot up,
just as just building starts fell in July.
Let's have a look at housing:
The Commerce Department on Tuesday said
housing starts fell 1% to an annualized 581,000 units, which was below the
market expectation of 600,000 units.
Let's see, 300 million people growing at an
annual rate of about 0.975% means the US needs housing for another 3 million
people every year.
581,000 housing units should be more than
enough to cater for about half that.
Wow… I feel confident.
Except…. There is a housing overhang of
about 15 MILLION housing units. The US
will have to grow at the same pace for at least five years to soak up the
excess.
Back in 2007, the rate of housing starts
was 2.2 million units -- about 2 for every 3 new Americans. And these were family units.
So,
one may ask, what on earth caused builder confidence to continue to climb in
August, as the headlines screamed.
Well,
the builder confidence index rose two points from 16 to 18. "Excellent," said the editor,
"That's headline material, that is."
Buried
way back in the bottom of some articles you'll find that this is a score not
out of 20 or 30, but out of 100!
Imagine that. A score of 49
indicates that more builders consider the future "poor" than
"good".
A
score of 25 indicates that most builders consider the industry prospects
"piss poor".
A
score of 16 indicates that the industry in way deep in the toilet and that in
the building community, 16% of people are stupid -- as in the rest of the
population.
But
the rise from 16 to 18 -- wow… that's headline stuff? More likely the unemployed builders have been
watching FOX News and increased the percentage of idiots in the trade.
With
an outlook that isn't worth pissing on, I do hope Obama isn't pinning his hopes
on the building industry to recover.
With
the economy shrinking and jobs going, people are moving back into their
parents' places and actually increasing the number of empty homes across the
US.
While
the market inventory has fallen to about 4.7 million units, the shadow
inventory -- houses that people want to sell but aren’t on the market -- is
probably growing faster than the official overhang is shrinking.
But don’t
mention any of this. Let's just be
grateful that the home builders confidence index shot up by 12.5% last month!
