In addition, there appear to be a growing backlog of potential foreclosures. As publicized recently in the Time that strapped consumers are paying credit-card bills before mortgages. This change of math stems primarily from falling housing prices, loan-modification programs and restricted credit.
In any case, U.S. households' net worth in real estate was down by 53.3% from the end of 2006.
Optimism Pinned on Recovery
Right now, it seems the markets areshruggingoff the sovereign debt crisis in Europe, andbasing their optimism on the expectation of a sustained economic recovery. However, in the U.S., consumer spending still drives about 70% of the GDP growth. And for consumers, job and home equity gloom pretty much means a chock hold on spending, which presents a challenge to thebusiness profit growth in the medium term.
From that perspective, it is probably premature for Bank of America Merrill Lynch to suggest "We suspect confidence will recover as we begin to see a turn in the labor market," partly based on the surprise retail sales (minus autos) jump of 0.8% in the February blizzard.
Market Exuberance & Correction
Meanwhile, the AAII cautionedthat the spread between bullish and bearish sentiment in its index is now at +20 percentage points, more than double the historical average of +9 percentage points.
Historically, similarly wide spreads preceded the mini-corrections of August 2009 and January 2010. In both instances, the spread stayed at similar levels for a period of three weeks before the market topped and pulled back.
Economic Forecasts & Opinions
In any case, U.S. households' net worth in real estate was down by 53.3% from the end of 2006.
Optimism Pinned on Recovery
Right now, it seems the markets areshruggingoff the sovereign debt crisis in Europe, andbasing their optimism on the expectation of a sustained economic recovery. However, in the U.S., consumer spending still drives about 70% of the GDP growth. And for consumers, job and home equity gloom pretty much means a chock hold on spending, which presents a challenge to thebusiness profit growth in the medium term.
Market Exuberance & Correction
Meanwhile, the AAII cautionedthat the spread between bullish and bearish sentiment in its index is now at +20 percentage points, more than double the historical average of +9 percentage points.
Historically, similarly wide spreads preceded the mini-corrections of August 2009 and January 2010. In both instances, the spread stayed at similar levels for a period of three weeks before the market topped and pulled back.
"The trouble, in my opinion, with corporate America today, is that everything is thought of in quarters." ~ Henry Kravis(Hat Tip: dvolatility, Shane Drozdowski)
Economic Forecasts & Opinions
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