Over the last several days, I began hearing a new description of the economy by the mainstream media (MSM)—“turnaround.”
I can’t tell you how many different ways this phrase was used, but it was enough to get my attention.
I don’t know who comes up with this stuff or where it is hatched, but I think this phrase is the new “recovery” term. Remember when we started out with “green shoots”? That phrase turned yellow and died. Then, there was the “fragile recovery,” and that turned into just a “recovery.” After that, we hit a “soft patch” and that was just “transitory.” Now, we have moved on to the “turnaround.” Is the economy turning around? The data says no.
When it comes to home sales, well, the most recent numbers from the Case-Shiller index shows an ongoing disaster. In the 20-city survey of home values, all but one market was down—Washington, D.C. This is, of course, the home of the big spending government. How much were home prices up there?–a whopping 1.3%. The average year over year decline in the entire 20-city survey was a negative 3.4%. Some markets, such as Tampa, Seattle, Minneapolis and Las Vegas, were down between 6% and 8.5%. In Atlanta, home prices were down by nearly 12%! (Read the entire Case-Shiller report by clicking here.)
Please keep in mind, these declines are happening despite a 30-year mortgage rate of around 4%.
Many say this is an artificial rate that is being engineered by the Federal Reserve. What do you think will happen to home prices when interest rates rise to a modest 7% level? Can you say second leg of a housing crash? I’ll say it again, what “turnaround”?