Stocks struggled at the open and rose late on mixed economic data. It’s been said that there are lies, dam lies and statistics. New Home Sales increased 23.6% in June to a larger than expected annual rate of 330,000 units, a great headline and true as per the Census Bureau. Month’s supply dropped sharply to 7.6 while the Median Price slipped 1.9% to $214,500. All regions posted substantial gain except the western region. It fell for a second month dropping 6.6%. The reality of this report is that much of June’s gain was driven by a substantial downward revision to previous month’s data, from 300,000 units to 267,000 units a difference of 11%. The June sales figure is the worst figure for that month on record, while May set the new all time record low. Further the initially reported gains of +27 and +15% for March and April, the peak tax credit buying months have been revised down to just +11% and + 10% respectively, all of which serves to illustrate that this is a volatile series subject to substantial revisions. That said it should be noted that post tax credit sales are clearly struggling which speaks volumes about the broader problems facing the demand side of the equation.
The Chicago Fed National Index fell sharply in June, dropping .84 to a -.63, declines were broad based. The 3-month average also declined substantially dropping .36 to -.05. This mirrors recent sharp reversals in the ECRI Weekly Leading Index that went from strong growth to a recessionary –10.5%. The Chicago Fed Index needs to hit -.7 before a recession is indicated, nonetheless this is a sharp reversal and they usually continue.
On the heels of this we have Treasury Secretary Geithner on national media telling everybody he doesn’t expect a double dip recession, or more accurately a continuation of the current recession after a period of moderation. Citing the high levels of business cash and resultant need for business CapEx spending to satisfy pent up consumer demand. Mr. Geithner is certainly entitled to his opinions and I do acknowledge that he has a responsibility to talk a good game and promote the economy. The facts on the ground however stand in stark contrast to his statements indicating he is either clueless or a BS artist. Further it was the incessant promotion of ideas and strategies that weren’t backed buy sound financial analysis that was instrumental in precipitating the current crisis.
Because it’s about sustainability and promoting ideas and strategies that are not based on a careful factual analysis of the relevant data, particularly by someone in a position of power and influence is both morally and professionally reprehensible. Honestly the government, mainstream media and there financial sector brethren should be ashamed of themselves for the amount of economic ruin and pain visited upon society compliments of both their willful actions and inactions. Instead we bail them out with our tax dollars, creating moral hazard in the process, leaving the citizenry holding the bag for their miscreant behavior while they collect their bonuses and near record numbers of Americans collect unemployment and Food Stamps.
Hi and welcome to The Profit Motive, I’m your host Caleb Lawrence. Once upon a time in America the media acted as the watchdog of the corporations and the state. In the modern era it’s all about ratings and profits, opinion has been substituted for news and frequently is presented as fact. 
