We have a mixed bag on the economy this week. The stock market took a pretty big dive (biggest drop on the year), but housing sales, and prices, seem to be on the rise.
If you have been reading my column for a while, you’ll know that I don’t have much respect for traders (especially day traders) on Wall Street. They are very fickle. If you watch them day by day, you will think that the economy is making vast changes in direction, almost on a daily basis. This could not, and is not true.
The economy will take a few turns on recent news, but never reverse direction. The economy is a function of how much we produce, compared to how much we consume. This does not change daily. Oil prices might change daily, and they will affect production, but not to a great extent.
If you watch the economic shows on TV, you will find a few good guesses as to why the markets took such a drop last week. My best guess is that it was over inflated and traders saw an opportunity to correct the prices. This doesn’t mean that they are fixed now, and it certainly doesn’t mean that they won’t jump higher, without cause. Nonetheless, prices were high, and they are now closer to where they should be.
So, is housing making a comeback? To answer this question, we are going to have to wait a little longer. A few housing starts and a few bumps in prices don’t equate to a comeback. Housing was so badly hurt during the 2008 mortgage crash, that it virtually disappeared.
A comeback would mean housing production, near the 2007 - 2008 peak. We are nowhere near that level.
This is also the best time of year to start building houses. The weather is certainly helping, and a push by some folks to be in a good school district is making the land around us very valuable to new homeowners.
Building lots, which were developed five years ago, are selling at huge discounts. There are lots of enticements out there to get the housing market back, but once they go away, we can’t be sure that the market won’t fade. I wish I could set a date as to when we will know whether housing is back or not.
Sorry, but there are too many variables. I will keep an eye on housing, through the summer. Since housing employs so many Americans, it is vital to our economic recovery.
Oil prices have drifted up and down in recent weeks. They are pretty close to where they were three months ago. I don’t see any spikes coming, before the fall. If the weather stays mild, electricity consumption will stay low, and that usually keeps oil down as well.
The folks who own property and businesses on the Jersey shore, are hoping to get business back to normal very soon. Even Gov. Christie has been helping to make commercials, to bring people back to the shore. They won’t have as good a year as last year, but if they can hold 50 percent of the business from last year, they should feel accomplished. I was down at Seaside Heights, a few weeks ago. The devastation was hard to look at, especially north of the heights. It will be years before the properties there, look like they did, one year ago. Some houses were literally upside down. Let’s hope that we all can enjoy summers down the shore, as we did before.
If our federal government continues to roll back jobs, and cut the silly nonsense of spying on good Americans, we might get out of this economic jam. Sure would be nice if Michelle Obama recognized how foolish she looks when she spends $100 million on a trip to Africa.
David Paul Snyder is the flight training manager for two Israeli business jets. He is a former pilot for PanAm and is former chairman of the Bucks County Airport Authority.