” Turning to the economy, I’d like to share some data from the always-insightful Liscio Report. For those who don’t know, Liscio monitors (among other statistics) sales-tax receipts by state around the country, as that’s obviously a good barometer for expenditures. Here are some quotes from their weekly commentary:
“State sales-tax collections continue to fall, relative to budgetary projections. In September, just 37% of the states in our survey met their forecasted sales-tax collections, down from 51% in August. . . . [There is] “a growing weakening in consumer spending. . . . The slide that began in January has continued since, and our contacts believe it’s real.”
Liscio attributes the slowdown in consumer spending to the weakened housing market. (The report includes an informative chart that shows the continuing decline in the rate of equity extraction.) According to Liscio, people are walking away from downpayments, and some of those who’d like to put their homes for sale cannot do so, because they’d have to “bring a check to the closing.”
Sunny Skies, Sullen Realtors
Continuing on, Liscio quotes one of its contacts in formerly hot South Florida: “The market has evaporated. Even the affordable stuff can’t be given away. Desperation among developers, bankers, and speculators is palpable.” As to those folks pointing to the recent uptick in mortgage financing generically, Liscio says that it’s related to people trying to “avoid painful resets on kinky mortgages, and not to monetize depreciating equity (as equity seems not to be appreciating anymore).”
The report sums up: “We’ve noted in the past that this expansion was the most consumption-intensive in modern U.S. economic history. . . . That’s changing, and dramatically. . . .Retail sales are clearly in a slowing trend.” So, for those folks who think that the stock market rally means the economy is on the mend (before it has even really weakened), I offer up the Liscio Report as food for thought.”
