David Rosenberg saw a green shoot today! The chronically bearish economist (now working at Gluskin Sheff + Associates Inc. in Toronto) got enthusiastic in a July 28 commentary about the sequential rise in the Case-Shiller home price index (in the U.S.), the first since May, 2006 (seasonally adjusted prices were still down, thought).
This uptick in housing prices is even more significant for Rosenberg in that it comes a day afternews that the inventory of unsold new housing in the U.S. tumbled from 10.2 months’ supply to 8.8 months supply (a three-year low). The housing bottom looks like its falling intoplace and so does another plank in the recovery platform: Stabilizing residential real estate prices is absolutely an essential ingredient in transitioning out of the recession, notes Rosenberg.
In sum, the credit and housing shocks appear to be subsiding. That leaves, he says, one other shock stillout of control: the employment trauma and the dampening impact on consumer confidence and spending. According to the Redbook survey, chain store sales over the first three weeks of July were down -5.6% year-over-year on an annual basis (versus -5.0% expected). These spending numbers are going to have to turn around if the widely anticipated 3Q inventory bounce is to go down as anything more than a one-quarter wonder.”