Posted on 04/28/2009
According to the article A Faint Sound of Applause recently published in the “Economist,” the market is going to bounce back soon. Yea! There is finally a light at the end of this long tunnel. Who hasn’t been or who doesn’t know someone who has been adversely affected by the current economy? It seems everyone is losing their jobs or their houses. Don’t just take my word for the rebound, read this quote for yourself.
“Some signs suggest that the recession is lifting. America’s housing bubble seems mostly deflated. According to the S&P/Case-Shiller 20-city index, house prices through January were down 29% from their all-time peak. Relative to incomes, houses are now 10% undervalued, and relative to rents they are fairly valued. This is luring buyers back. House sales rose unexpectedly in February while vehicle sales rose by 8% in March. Even new claims for unemployment insurance have stopped rising.
What has brought this turnabout? In part, the normal corrective powers of the economy. Annualized housing starts are about a quarter of the rate needed to support the forming of new households, so sooner or later we will see a strong rebound. The improvement is also the expected response to monetary and fiscal stimulus, both of which have been exceptionally aggressive. The Federal Reserve, having lowered short-term interest rates in effect to zero, has intervened in bond markets to push down long-term mortgage rates as well.”
At least now we have a financial publication saying things are going to turn around. If we can’t trust the media, who can we trust?
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