Weekly Observation for September 3, 2011 August Home Sales Finish Strong While Jobs Market Stagnates
September 3rd, 2011Well, it was a good news bad news week. Let’s begin with the good news regarding the Springfield Illinois housing market. As I have shared over the past months the only thing consistent about our housing market is inconsistency.
Member brokers of the CAAR MIS reported these preliminary home sales figures for August. Brokers have until Thursday for final reporting. I’ll share the final numbers with you next Saturday.
August 2011 compared to August 2010. Closed home sales of 344 up 38.15%, however down 4% from the five year average. Home listings going under contract 401 up 20.42%, and even with the five year average. That’s good news as brokers reported a rush of sales this past week exceeding 100 for the first time since the week ending July 23. The number of homes reported under contract are up by only 2.9% over last year on this date, which is a concern because last year was not good.
The inventory of homes for sale stands at a three year high with 492 listings added in August up by 4.6%. Through August there have been 4994 home listings available with 2199 sold and closed year to date, representing 44% of listings.
The median sale price of $112,750 was down 3.63% from $117,000. Year to date the median sale price is down fractionally at $110,000.
That’s the good news. Home sales returning to near normal levels and prices holding fairly stable in the face of state and national economies stagnating to falling.
Now the bad news.
Since imposing the historic tax increases Illinois has lost more jobs than any state in the nation with the unemployment rate climbing to 9.5% in July. Illinois ranks 7th for the number of foreclosures. Springfield in the heart of the state is fortunate to have such a resilient housing market.
There was awful news on the national jobs picture as the Department of Labor reported the private sector created 17,000 jobs in August only to be offset by cuts in government jobs bringing the net jobs figure to zero. The first time a net zero has been reported since 1945. To me this is not surprising at all.
The Obama economic policies of government spending to grow the economy, or Keynesian economic theory is similar to that of FDR. Regrettably with similar results. The Economics department at UCLA concluded that these policies extended the Great Depression by seven years.
Even FDR’s Secretary of the Treasury Henry Morgenthau admitted in 1938 that quote: We have spent more money than ever and have ended up where we started, with a load of debt to boot. Morganthau was referring to the 19% unemployment rate in 1933 that finished at 19% in 1938. The difference is that unemployment is higher today than before the trillions of Obama spending occurred. At least FDR’s was unchanged. Both leaving massive debts to repay that depress the private sector in fear of higher taxes.
The economy will not recover until the housing market recovers, and neither will recover until there is growth in the economy and jobs are being created. Professor Judd has said on my program we would need to create 300,000 jobs every month for 36 straight to lower the unemployment rate to 6%. Zero won’t get us there.
The president announced this week the appointment of Professor Alan Krueger of Princeton to head his team of economic advisers. Yet another in a chain of academics with no private sector experience. The college experiment must end soon as each adviser’s plans have failed.
The president will be announcing his new jobs plan this coming week, and it appears to be more of the same. More spending, which is why our credit rating was downgraded, a call for bigger government which is depressing the private sector due to the costs of the exploding size of federal bureaucracies. Government job cuts have come at the state and local levels.
Proposing tax credits to businesses that hire are ineffective because only those who would be hiring anyway will benefit. Businesses don’t make a long term commitment to hire an employee based upon a one time credit. Tax cuts always produce better results than credits. I expect the presidents plan if adopted, will fail to produce any meaningful results just as his previous plans because these plans are founded upon government as the solution.
Government does not create jobs or wealth as Professor Judd has explained. Government can either get in the way or out of the way of private sector growth. The Dodd Frank Finance Law, Obamacare, energy policy that keeps gas prices and food prices high, temporary tax cuts, and oppressive bureaucratic regulations are preventing economic growth. Businesses cannot plan ahead with all these unknown costs and therefore will not hire. This has resulted in consumer confidence falling to the lowest level since April of 2009. Obama has us right back where we started.
The AP needs to hire some journalists with an understanding of economics. Contrast AP stories yesterday to today in the SJR. Yesterday’s headline in the Business section in giant font: Recession Fears Dim. On what information did AP base this upon? Rising car sales.
Contrast yesterdays headline: Recession Fears Dim in the Business section to today’s front page headline: Dismal Jobs Numbers Add to Recession Fears. That dimming of recession didn’t last long did it?
From the first paragraph of today’s AP article: Employers added no jobs in August-an alarming setback for the economy that renewed fears of another recession and raised pressure on Washington to end the hiring standstill. A classic example of economic ignorance. Washington doesn’t create jobs.
An alarming setback? With growth in the economy at seven tenths of a percent did these reporters think there would be jobs created? If they are serious about Washington ending the hiring standstill then they would be advocating the repeal of Dodd Frank, Obamacare, the lifting of oil drilling moratoriums, put the Keystone Pipeline on fast track approval, reign in out of control bureaucrats that have added $49.5 billion in costs to business with new rules, and make tax cuts permanent so businesses and people could long last have some certainty.
Kudos to President Obama for blocking the new smog rules that the EPA was about to implement that would have added an additional $90 billion dollars a year to business costs. Obama is running for reelection and he has to have jobs being created to win. This new rule would have cost an estimated 100,000 jobs. Somehow I believe if Obama wins reelection this jobs killing rule along with many others will be implemented. This is just a delay in the radical environmental agenda that is helping drag down the economy.
Has President Obama finally seen the light? His past policy decisions have already cost hundreds of thousands of jobs. The stalled ten thousand jobs in SC with the radical NLRB dictating to Boeing where that can operate their business, the five thousand jobs that would have been created from the AT&T T-Mobile merger, and the estimated 340,000 jobs the Obama drilling bans & moratoriums have already cost the economy as but a few examples.
The reason the AP reporters are alarmed at the news is because they actually believe the presidents plans would work, in spite of nearly three years of results that prove otherwise. The president and media are of the same ideology. Regrettably the laws of economics have trumped ideology. There never has been a recovery except in the political spin of the administration, reported as truth by a sycophant media.
This week famed international economist Noriel Roubini said we are headed back to recession. We need honest reporting and we need a change in economic policy. Bringing in another Ivy League egghead who has never had a private sector job, or a new jobs plan proposing more of the same, will likely produce the same results.
Einstein said doing the same thing over and over again and expecting different results is insane. Our economic policy is exactly that, insane. That my friends is the bad news, especially for the over 14 million Americans out of work.
The opinions expressed here are solely those of Fritz Pfister or identified sources, and not necessarily those of RE/MAX Professionals of Springfield or RE/MAX International.
