The news last week was generally favorable for housing and lending, though you would hardly know it by the pessimistic spin applied by media commentators. For instance, sales of existing homes unexpectedly rose 0.4% in November to an annual rate of 5 million units, according to the National Association of Realtors. Unfortunately, the accompanying commentary was generally nuanced pessimistically in the media. In another example, orders from U.S. factories rose more than forecast in November. The 1.5% increase was the most in four months and followed a revised 0.7% increase in October, according to the Commerce Department. Nevertheless, the corresponding commentary generally mirrored that of a Lehman Brothers economist who said: “Manufacturers are becoming more cautious. We do think the next several quarters are going to be a prolonged period of weakness.'' There was genuinely negative news: Hiring in the U.S. slowed more than forecast in December and unemployment jumped to a two-year high, rising from 4.7% in November to 5.0%. That news was greeted with the obligatory, if not patronizing, “I-told-you-so” explanations. There are, of course, genuine economic concerns, as most of us are well aware. The point is to explicate that no matter what positive news is disseminated at this point, it's unlikely to be received favorably. Commentators are lagging indicators: They aren't going to presage the possibility of a housing or lending recovery until it is well under way.
Eric P. Egeland