Today, the Whitehouse has begun the process of lowering expectations for the the 3rd Quarter GDP report. It is obvious that the numbers have already been given to the President. The rest of us will have to wait until next Thursday for the Commerce Department release. Judging from the guarded remarks coming from the President's press secretary, the number maybe negative. Based on what I have seen, I do not think that the damage done in September is enough to overcome July and August. I am probably wrong. Norman is a long way from Washington. I do think that the current quarter will be negative. The Panic of 2008 has done some serious damage.
Also released today is a report showing that existing home sales were at their highest level last month in five years. The increase is the result of declining home prices. Tuesday, the Case-Schiller Index for August will be release. It should show that housing prices are approaching the long-term trend line. Most of the large California cities are nearing the end of the real estate bubble correction. Based on the loss of confidence by consumers prices will most likely go below the long-term trend line before home construction can return to a normal level. In the mean time, local governments will continue to see stagnant sales tax revenues.
As soon as the election is over, there will be an about face by the press concerning the economy. "Be Afraid, Very Afraid" will be replaced by "Be Optimistic, Very Optimistic." Oh well, that will be big improvement over what we are being subjected to now.
