The economy has not really been in a recovery. It’s just been propped up by bailouts and tax credits.
The latest evidence of this viewpoint is new home sales. Tax credits end, new home sales virtually stop. Click here to read about the latest numbers. Sales of new homes collapsed 33% in May.
Yesterday we received news that sales of existing homes were starting to slip, too. Click here for more on that. This smaller dip came despite the fact that tax credits were still available for existing homes in May.
Meanwhile, the foreclosure crisis that started this mess is showing some signs of leveling off. RealtyTrak reports a 3% decline in foreclosures in May, but attributed some of that decline to banks working faster to deal with troubled properties. It also noted bank repossessions hit a record high in May. Click here for more on that.
When you get right down to it, not much growth is happening without government stimulus spending and crediting. The job market improvements are largely attributable to temporary census taking gigs. The improvements we see in banking, finance and even the stock market are largely due to nearly 0% interest rates.
Ask yourself this: How can the U.S. economy truly recover from a housing-induced recession unless housing recovers first?