The Economy Is Starting To Free-Fall: Housing, Autos, Retail

Wednesday, January 15, 2014
By Paul Martin

Truthingold.blogspot.com
TUESDAY, JANUARY 14, 2014

In the latest retail sales report for December, auto sales were nailed – down 1.8%. The only reason overall retail sales from November to December showed a slight “gain” that November’s number was revised lower. Electronics fell off of a cliff. The housing market is about to get crushed. Feedback I’m getting from my Seeking Alpha articles and blog posts on housing from housing market professionals all around the country tells me that the housing market hit a wall at the end of 2013, as I have been forecasting.

The consumer is dead on arrival. I love the way last week’s retail sales were blamed on the cold weather that hit the country the previous week. I guess consumers were still thawing out and decided to not restock on everything last week even though it warmed up in most of the country. The only thing “frozen” is the real wages and disposable income of the majority of Americans. And what’s left over after the monthly of cost of Obamacare is spent won’t be enough to buy a new car or a new home.

The proliferation of sub-prime quality, Government-subsidized auto loans made it a no-brainer for Americans to go out and buy a new car last year – just like no-document ARM mortgages coerced the peak of the housing bubble. But all that did was “pull” sales forward into 2013 and set up another debt-default crisis. The delinquency rate on sub-prime auto loans – now 28% of all auto loans – started to move a lot higher toward the end of 2013.

Even worse, the Dodd-Frank legislation that is supposed to protect America from Wall Street’s monsters – which it won’t as the beasts have already had their battalions of lawyers figure out ways around it – has imposed new mortgage rules which will make if more difficult for the average guy with no growth in real income to get a mortgage. In additions, the FHA implemented a reduction in the size of the standard mortgage it will guarantee in most markets – significant reductions in some markets. Wave good-bye to the fabled housing “recovery.”

The Rest…HERE

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