Avoiding the obvious conclusion

Calculated Risk considers his indicators:

Historically the best leading indicator for the economy (and employment) has been housing. I’ve been writing about this for years. For a great summary paper, see Professor Leamer’s presentation from the 2007 Jackson Hole Symposium: Housing and the Business Cycle

For housing as a leading indicator, I use Residential Investment (quarterly from the BEA’s GDP report), and monthly data on Housing Starts and New Home sales from the Census Bureau, and builder confidence from the NAHB.

1. “Total starts had rebounded to 590 thousand in June, and have moved mostly sideways for eight months.”

2. “The record low was 8 set in January 2009. This is still very low – and this is what I’ve expected – a long period of builder depression. The HMI has been in the 15 to 19 range since May 2009.”

3. “New Home Sales in January were at a seasonally adjusted annual rate (SAAR) of 309 thousand. This is a record low and a sharp decrease from the 348 thousand rate in December.”

I don’t think the correct conclusion is to say that “any growth will be sluggish and choppy”, but rather “this supports the debt-deflation data showing economic contraction and very clearly shows that there is no recovery no matter what the GDP numbers say”.