Are We Even In the Woods Yet?

Home Builder with CSR

In the old days (only a few years ago) it took eighteen months for federal economic policy to materialize in the markets. It is a big world out there and nothing works overnight. Rate increases or drops take time to move through markets and influence economies. This same incubation period, if you will, works with private market influences as well. Housing markets do not rise and fall by the month but by the year. The influence a down housing market has on an economy takes even longer.

I used to joke that the jewler feels it first when the mortgage brokers aren't buying Rolexs anymore. Then the pool contractor feels it when the jeweler has to cancel his plans to add on a pool becaue he isn't selling as many Rolexs. The contractor then cancels his trip to Hawaii and so on, you get the picture. 

That all takes time. Many will argue that we are in a new economic era when things just move faster (with the internet and all...). That may be a valid argument too, I really don't know. People used to argue that the dynamics of markets had changed back during the dotcom boom. They argued that profits didn't matter anymore and real value was found in forecasts. They were wrong. Well, at least most of them were.

This recession or even depression hasn't even started yet and I am hearing that we are in recovery. As a mortgage banker/broker I saw the signs of this sowdown in 2004. I was closing less loans and my employees weren't as excited as they had been. I knew early on that we had plateaued in 2003. I just didn't know how bad it  would get and how long the downturn would last. I still don't.

I just am guessing though that based on that old eighteen month rule, that the worst is yet to come. I hope I am wrong, but those silly old economic fundamentals keep proving themselves to be more relevant than old. The real problem is that with the rapidity with which information travels we have already lived through a recession. We have all seen enough of it on the news and in blogs. I am already tired of hearing about it. The danger here is that we all think it may be over soon when some of the bedrock indicators are telling us we haven't even seen the beginning yet. I know that perception is everything these days, but is it really everything? Don't the numbers matter a little?

This is all really just food for thought.  I do not have just one point to make. Maybe we just need to slow down and smell the roses. If the real recession is yet to come we are all going to be too tired of it to deal with it. I already am. I am going to nap now.


Bill Austin
East Valley Living - Scottsdale, AZ

The pool builders are actually in free fall.  They have been hurting for at least six months.

Jun 18, 2008 11:20 AM
Greg Hampton
Re/Max Around The Mountains - Blue Ridge, GA
North Georgia Mountain Property,Blue Rid

Thanks I was feeling a little blue today, Thank God for the litttle blue pills my mom has.

Jun 18, 2008 11:21 AM
James Graner
Residential Services: - Saint Charles, MO

Who knows.

I think too much money is leaving the economy with high oil prices. Motor oil, plastic, gas, asphalt, etc..., these prices have to come down. We might lose ownership of some major industry, with the weak dollar. Anheuser-Busch looks like they will survive the hostile takeover, however more companies will face foriegn takeovers until our dollar raises. A rising US dollar is not likely with low interest rates. We might have a long haul.

Jun 18, 2008 04:06 PM
Es r
CSR - Huntington, TX

Bill, I hope your not a pool contractor, Greg, can I get some of those pills? James, I agree, however a rising dollar presents new problems. It is much easier to pay back our massive debt with devalued dollars. We knew that when we borrowed so much, that we would be paying that debt back with devalued dollars. But you are right, we have gone too far. That is the pickle we are in, when interest rates are low, it may stimulate the economy but it doesn't make our debt the most attractive investment, especially when the dollar is so low. We will have to raise rates to make us attractive again, and risk stifling an already battered economy in the process. Thank you all for your comments.

Jun 18, 2008 06:54 PM