Right now, or so it would appear, we are entering the winter of discontent in the US. The latest news out yesterday was grim indeed.
The bard, after opening his play Richard III with his famous saying on discontent, went on to describe the central character as, “Deformed, unfinished, sent before his time into this breathing world, scarce half made up.” And yesterday, the latest data certainly painted an image of a most unpleasant face for Uncle Sam’s economy.
Actually, the bad news came in two forms. US consumer confidence and house prices.
The US Consumer Confidence Index fell to earth in November, dropping from a worrying 95.2, to a disastrous 87.3. The last time it was lower than that was in March 2004, but that was in the aftermath of Hurricane Katrina.
Bear this in mind. The US Conference Board, which releases these figures, has this habit of changing the data downwards when it announces the next batch. For example, last month it said the Consumer Confidence Index for October was 99.6, but now has October coming in at four points less than that. So, if it remains true to form, then next month we will discover that actually the index for November is much lower than we are currently being told. If that happens we will have to rewind the clock back an awfully long time to discover the last occasion it was so low.
Yesterday also saw the release of the latest Case-Shiller house price index from Standard and Poor’s. And boy, is it down.
The index for measuring house prices across the US fell by 0.9 per cent in just the one month period from September to October. As for peak to trough, well, the index peaked in July 2006, and is now 10.9 per cent down from that.
Not so long ago, pundits were predicting a mere slowdown for US house prices, with few expecting to see falls. So much for those predictions.
In fact, the US has seen bigger monthly drops before, but only just. We got our slide rules out and had a gander at the Standard and Poor’s data going back all the way to February 1987, and during that period, the monthly rate fall was higher than that on just three occasions, November 1990, and January and February 1991. But the peak to trough fall during that period was not so bad, with the Case-Shiller index falling 5.6 per cent from October 1989 to April 1991.
But if that sounds pretty bad, pity those poor old home owners living in the five worst afflicted areas. In Tampa Florida, the index is now down by over 11 per cent from peak to trough.
Furthermore, of the 20 regions the Case-Shiller index tracks, not one recorded a rise in the index over last month.
With mounting evidence to suggest that the credit crunch is far from over, it would take a brave soul to predict an imminent improvement in these figures. More falls are far more likely.
The National Association of Realtors will be publishing its figures on US median and mean house prices this week. Last month it revealed a 7.64 per cent drop from peak to trough.
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