While President Obama was touring the capitals of Latin America this week, Americans were being battered by one bad economic report after another.
The worst were in the housing industry, which is rapidly sinking into what economic analysts say is a “double-dip recession” as home prices continue to plunge, mortgage foreclosures continue to rise and the home-building industry plummets into recession levels that haven’t been seen in more than half a century.
A Commerce Department report released Wednesday said sales of new homes fell by a jaw-dropping 16.9 percent in February. That followed an alarming report from the National Association of Realtors on Monday that said existing-home prices had plummeted again in every region of the county and were down by an average of one-third since the recession started.
And last week’s Commerce Department report stated that new housing construction had nose-dived last month by 22.5 percent, the worst monthly decline since 1984. Meantime, new-home construction permits have dropped to their lowest level since the government started tracking them in 1960.
“Within the space of a week, the nation has witnessed the worst performances on record of new home sales, home prices and building - evidence that the housing market has sunk into a double-dip recession that poses a significant drag on the overall economy,” writes economics reporter Patrice Hill in Thursday’s edition of The Washington Times.
The housing industry is a pivotal part of our overall economy, and it’s hard to see the rest of the economy expanding at a healthy rate when housing remains in a recession, threatening future growth.
Huge home-price declines of up to 60 percent in some regions of the country “increase the likelihood that more people will end up defaulting on mortgages that are worth far more than the homes they finance and that homeowners can afford to pay,” Ms. Hill writes.
Peter Schiff, CEO of Euro Pacific Capital, predicts that home prices will drop by another 20 percent on average, triggering a wave of new defaults that could lead to “another, deeper financial crisis.”
These dismal housing statistics are not the only numbers that suggest the Obama administration’s economic policies - if there are any - are not working and pose the biggest political challenge to his re-election in 2012.
According to the Gallup Poll’s tracking surveys, no issue is more important to voters than the economy, and the voters clearly are not happy with Mr. Obama’s performance. It is one of his weakest scores: 55 percent say he is doing a poor job on making America prosperous again.
Gallup reported Thursday that his overall job-approval rating has sunk to 45 percent, with 46 percent of Americans saying they disapprove of his performance.
Gallup’s national economic tracking numbers tell us why. They put the unemployment rate at 9.9 percent and, more ominously, the underemployment rate (which counts discouraged workers who are no longer looking for a job or have been forced to work part time) at 19.6 percent.
A recent Gallup poll found that 83 percent of Americans say this is a “bad time” to find a quality job.
I reported in a recent column that, despite Mr. Obama’s claim that the jobs picture is improving, half of all states have unemployment rates of between 9 percent and 14.2 percent. Ten of these states are at more than 10 percent.
The overall economy has climbed out of the 2008-09 recession largely because businesses have cut costs, improved productivity and boosted earnings.