Economics Update

The lede on most business sections was good news, that home sales rose in December, as you can see on the top chart, but as the bottom chart clearly shows, home prices continue to fall.

Prices are down 15.3% year over year, and sales in 2008 are down 13% from 2007 sales.

The real question is how much of this is foreclosures and other REOs creating a market for bottom feeders, because the percentage of foreclosures relative to sales is way up.

Of course, interest rates have gone up a bit for mortgages, as they have in Treasuries, and this might further reduce home sales.

We also have the Conference Board’s index of leading economic indicators rising for the first time in 6 months, but it appears that this is entirely because of increasing money supply, as the Fed cranks up the presses.

The National Association of Business Economics' (NABE) quarterly industry poll shows a far more pessimistic view of the path forward, with the worst numbers since they started the survey in 1982.

Israel's central bank cut its benchmark rate by 75 basis points to 1%, on indications of a recession there.

In currency, the dollar fell, largely on good news on UK bank bailouts, and in energy oil was down about 6 bits, on reports of high inventories.