Do you ever wonder why every time we hear some economic news that doesn’t line up with the official line, the term “unexpected” is used, as if the government or someone else is completely caught off guard by it. That’s the case with the housing market recently, as a Wells Fargo (NSYE:WFC) economist confirmed it’s much weaker than originally believed, generated the expected phrase of it being unexpected.
According to data provided by the National Association of Realtors, agreements to buy homes plunged by 7.6 percent, with the conclusion being the tax credit is doing little to get people to sign up to buy new homes. The data is based on home sales which are pending, or in other words, contracts which have been signed.
Senior economist at Wells Fargo Securities LLC, Mark Vitner said this, “When you take away all the support from the housing market, the underlying demand for housing is a lot weaker than we thought. We clearly pushed some demand forward, and there wasn’t that much demand to pull forward anyway. The housing recovery is going to be very, very slow.”
For example, when you look at the data associated with factory orders, we continue to experience a period of replenishment and not growth. That’s why questions swirl around why the big growth numbers thrown out aren’t generating any jobs.
The reason why they aren’t is because the numbers really aren’t telling the story. A factory or manufacture replenishing equipment or supplies is just that. It has nothing to do with economic growth in any way, it’s just keeping things where they’re at until real growth comes. That means they need new equipment to continue operations where they now stand, not because new orders are coming in they must expand the business to accommodate. This is why the fact that factory orders increased again means pretty much nothing as it relates to economic or business growth. It just means they’re finally getting around to replenishing after waiting as long as they could before having to do it.
The other thing about factory data, is it isn’t related to the overall sector, but mostly to commerical aircraft being booked. Orders for replenishment like equipment and technology didn’t grow for the period, making replenishment for general factories even less likely after the big jump in December.
As far as the housing market, some are attempting to pass this off as being affected by the long, cold winter. But that assertion is undermined by the fact every region in the United State dropped in sales, no matter what type of weather they were experiencing. So while there could have been some temporary effect from the weather, it can’t in any way account for the drop in contracts signed by itself, although it would have to a minor degree slowed some sales down.
Taking into account just about every economic metric, we continue to hear “unexpected” when talking about data released. We need to forget about that and understand that the economy in the U.S. has been propped up artificially by the government infusing extraordinary amounts of money in it in attempts to ward off the effects of the crisis.
Now that the financial props are being removed, we’re seeing the nakedness of what is really there, and it’s not a pretty sight to behold. Let’s just stop using the term unexpected any longer. All that means is you’re listening to the spoon-fed government line the mainstream media is feeding everyone, rather than the reality we’re really still facing.
Whether it’s jobs, housing or factory orders, all signs show it’ll take years before we come back to pre-recession levels. In other words, we’re not in recovery, we’re continuing on in a recession that has never ended.
This is happening because government interference can’t create demand, which a free market is based upon; no matter how much money you throw at it.
