Searching For The Rebound

http://www.nytimes.com/2011/03/26/business/26charts.html?emc=eta1

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"Progress might have been all right once, but it has gone on too long." (Ogden Nash: 1902 to 1971)

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For those of you who have been regular "readers," I'm back. It's been a hectic last couple of months but now I'm hoping to get my volume back up. I'm really not sure how many of you are out there but I occasionally hear from people who like my perspective so I'll journey on. I'll probably start writing more in the first person because some of you like that better.

I've attached some data on housing from today's N.Y. Times which gives an excellent perspective on where that market is. The sales rate of existing homes (4.9 million over the last 12 months) is about the same as it was in mid-1999. Yet the sales of newly built single-family homes have dropped to levels not seen since the government began collecting data on this activity in 1963. The charts with the article show the stark direction of new home sales (Change in 12-month sales from 1979: 60% down and not looking like it's turning up).

This all boils down to who's buying what houses and what's happening to the inventory of foreclosed houses? Few of the sales are of new homes and a rising proportion are forced sales of homes that are no longer worth the amount that was borrowed.

And then there's commercial real estate. Steve Brown reports today in Dallas a very short list of office and industrial projects in North Texas: 4. The biggest metro area in Texas and there are four major office or industrial developments being built. The shear smallness of that number actually gives hope (at least to someone as experienced as Steve Brown) that things will improve next year. This lack of investment works into the continuing reports of all time record cash on the books of corporations: sure, the "cash" is there but where's the capital expenditure?

And then we have durable goods orders. They fell unexpectedly in February. Bookings for goods meant to last at least three years dropped 0.9% after a 3.6% gain the month before. One economist has pointed out that there is a risk that "... capital spending will be flat in the first half of the year."

Part of the housing market thing may be generational. Whatever the appropriate portion of any population is that should "own" a home, the generation coming along behind the baby boom group is not as large. The new "standard" for total home sales will be lower.

Overall, there just does not appear to be a rip roaring comeback happening. There are a lot of supply chain specialists and economists looking for positive numbers and really digging deep to find them.