US Economy — too hot, too cold, or just right?



When reading about the US economy, and as I look through different articles from various websites, one thing is certain — Democrats (leaders and followers) are never happy with Republicans and, Republicans are never happy with Democrats. Both sides would likely say, “They are not doing a good job managing/fixing/improving _____ (blank)” insert any political-type issue here – the economy, health-care, education, the war in Iraq, etc; “but we could do much better.” Or they’ll at least say that until they lose the election, and then they’ll smile for the camera, act like friends and say that they are “looking forward to working together for a better _____ (blank).”

So, in light of this week’s election, I thought it would be interesting to post some information relative to the U.S. economy — is it too hot? (the Feds might say it is, and hence, the possibility of an 18th rate-hike), too cold? (the Democrats might say, but I would argue mainly because they are pushing the ‘we could do better’ theme), or just right? (which is what the Republicans might say, partly to justify the job that their people are doing in office and to combat the whole ‘we could do better’ thing). And, because of election dynamics (spin) and because the White House has proven to be a miserable judge of who is and who is not doing a ‘heckuva job’ (see: Browny, Snowy, and Rummy), any real information about the strength or weakness of the US economy can not be gathered through political statements, newspaper headlines or television personalities (spin or ‘no-spin’).

Here is the problem — pick up the newspaper (or click to any favorite news website) and you will find an article that convincingly shows how poorly the economy is doing (the housing-bubble bursting, unemployment issues, etc.), turn the page (or click the mouse), and you’ll probably find another article discussing numbers and facts that would point to the US economy growing so strongly that additional Fed rate hikes may be necessary to slow things down.

So which is it? too hot? too cold? or just right?

Let’s take a look at two indicators that seem to tell the story best.

employment numbers: for last month, unemployment fell to 4.4% (it’s lowest in 5 years) and average hourly-earnings were reported up 3.9% for the past year. Seemingly, this would mean that more people are employed, and, on average, people are making more money than they did a year ago. But, the employment market has slowed down more than anticipated — still growing, just not as quickly as some ‘econo-guessers’ had hoped. So is this good news? or bad news? Well, it depends on where you read it . . . according to the “disappointing job growth” number was bad news. But, according to, the same data “[flashed] a picture of a strong labor market as midterm elections [drew] near.” So, which is it? good or bad?

the housing market: The media has hyped for more than a year over the issue of a bursting real estate bubble. While apparent (and somewhat obvious, I think) in some parts of the country — have you seen what kind of house you have to settle for in California if you can only spend $1 million?? — the reality of a recession-inducing nationwide housing bubble seems to have been avoided at this point. Although one reporter at claims we are “at the endgame for housing,” while others, as you might guess have a different view. Kendra Todd (winner of the Apprentice), claimed that “the housing bubble [was] a myth . . . [and that] bubbles are for bubble-baths.” Now, of course, the term is no longer bubble, but ‘measured moderation’, a ‘cooling market’, ‘soft land’, etc, and across the country, the housing market seems to be doing exactly what the Fed Chief Bernanke predicted, it is slowing down in an “orderly” fashion. So which is it? bursting-bubble? or an orderly slowing? Is there such thing as an orderly-bursting???

The real issue (aside from the fact that ‘news’ is not really ‘news’, but is instead some strange form of editorialized, politicized, agenda-driven, fake-unbiased information where the line between reality and opinion is hard to find), the real issue is that something like economic strength — whether it be employment, unemployment, house appreciation, house depreciation, or something similar — about the entire US economy is not a great indicator of the health of the same thing on a local level. In order to get an accurate idea of the economy as it relates to you, you need to know the data from your area.

I’ll work on another post for the Georgia-faithful who read “the Mortgage Blog,” to give you some local data . . . until then, the question of the US economy being too hot? too cold? or just right? might ought be replaced with this one . . . the news on the US economy . . . too left? or too right?

One Response to “US Economy — too hot, too cold, or just right?”

  1. Joshua Says:

    I’d be curious to know… what kind of “local data” you will be posting. I can help you with any real estate stats – particularly for the Intown Atlanta real estate marketplace – that might be of interest to your readers. Every two weeks I compile current inventory levels for each of the intown zip codes, along with the overall market absorption. This info is a great indication of the current “health” of the market and an invaluable tool for understanding the current and emerging housing market trends through straight, un-biased, un-filtered supply/demand stats. Let me know if this would be of interest to you.

    On another note, I really love reading your blog.

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