"No New Normal" Predicted

August 14, 2009
No New Normal JPMorgan Sees V-Shaped Recovery in U.S. (Update1)

The worst recession since the 1930s has created a reservoir of demand that will buoy the economy, say a growing number of economists led by James Glassman at JPMorgan Chase & Co., former Federal Reserve Governor Laurence Meyer and Stephen Stanley at RBS Securities Inc.

“Whenever we have plunged off a cliff and fallen into a deep hole in the past, for a while the economy has a tendency to bounce back very quickly,” said Glassman, a senior economist at JPMorgan in New York. Glassman and his colleagues this month said forecasts of 3 percent to 4 percent growth in coming quarters may be too low given “pent-up” consumer demand.

I asked my unemployed girlfriend how much "pent-up" consumer demand she had and her answer somewhat contradicted the opinion of James Glassman. Her "reservoir" appears mostly empty. Go figure. I therefore offer you this glimpse down memory lane to see how at least one of his previous predictions panned out.

January 16, 2008
US may avoid recession

"If there is any further decline at this point, it will probably be very marginal," predicted Lawrence Yun, chief economist of the National Association of Realtors, an industry trade group.

He noted the index had shown stability even after credit markets seized up in August.

If pending home sales are stabilizing, that would imply that existing home sales will begin to steady soon and there will be less need in the future for builders to cut back, Yun said.

James Glassman, an economist at JPMorgan in New York, agrees with Yun that the downturn in the housing sector appears to be nearing a bottom.

"Even if housing just stabilizes, the damage to the economy will start to ease," he said.

For the record, hindsight shows the DJIA is STILL down 25% from that day, we'd actually entered the recession one month earlier, AND last but certainly not least we're STILL looking for housing to stabilize (over a year and a half later)! Other than that, his predictions were right on the money. Hahaha!

August 11, 2009
U.S. home prices fall, but rate slows: report

Even so, stabilization of the hard-hit housing market, which is seen as key to an economic recovery in the United States, is not yet in view, with mounting foreclosures and a high level of "underwater" mortgages still posing threats, Zillow said.

August 13, 2009
South Florida home sales increase, but prices fall

Building on a months-long trend that analysts say is a sign of improved health in the housing market, existing home sales surged by 75 percent in Miami-Dade and 35 percent in Broward as steep price declines, low interest rates and tax incentives continue to drive demand.

Prices down on extremely high volume? That would be considered a panic on Wall Street's stock market, but in the wacky realm of real estate it is apparently considered a "sign of improved health". Who knew!