My bad Consumer Spending News

NEW -> Contingent Buyer Assistance Program
hs_teacher - Of course the only thing that effects price is supply and demand, but what effects supply and demand, and are those factors changing? A homeowner may have no inclination to sell their home, yet the inclination may be forced on them by their payment reaching a point they can no longer afford or one source of income going away so they can no longer afford their payment. One may think these causes are constant, but they may be changing and may be changing profoundly to increase supply way above what it would normally be or will be. Demand may be effected by variables also, and two of those variables may be increasing. All the marginal buyers who were able to purchase previously, but became able to purchase in the last couple of years because of faulty lending standards may cause future demand to fall. Not only do they already now have homes, but they will probably lose them, increasing supply. When consumer spending decreases, incomes decrease, leading to less potential buyers and ability to qualify for higher mortgages. Margins on credit default swaps and collateralized debt obligations are increasing which is pushing loan products out of reach of potential buyers, thereby decreasing demand. Factors affecting supply and demand are not constant. They are variable. In your words, "it's the ones who are participants of the buying and selling that are affected", but the number of participants can change, and not even by their own choice.
 
<p><em>"blaming the faltering U.S. housing market as well as unusual weather, and forecast a weak home-improvement market for the rest of the year"</em>.</p>

<p>Why's it always got to be the weather ? ;)


</p>
 
Thought this was an interesting read. This Brian Wesbury guy I think is off his rocker:





<em>""After the shock of rate hike works its way through the system, the ample liquidity of an easy monetary policy will reassert itself,"





</em>Uh...someone correct me but haven't interest rates been at or near 5.25% for near a yr now, how long does it take to "work it's way through the system"? Also, the FED just reported this week that they are going to regulate mortgage lending more stringently....man this guy is drinking some seriously good kool-aid.





http://finance.yahoo.com/real-estate/article/103039/Facing-the-Housing-Mess
 
New-car sales drop 7% in California

From Times Staff and Wire Reports

May 18, 2007



New-vehicle sales fell by 7% in California during the first quarter as the state's weakening housing market crimped consumer spending, the California Motor Car Dealers Assn. reported.



The fact that new-vehicle registrations in California suffered a much bigger drop than the national decline of 1.2% indicates how hard the state has been hit by the housing crunch, economists said. High gas prices and troubles in the sub-prime lending industry also are hurting sales.
 
Fortune writer Geoff Colvin says "the consumer buying binge is over"



"What's new - what gives me the confidence to make my insane prediction - is that all those factors have gone into reverse. The employment picture is deteriorating. Jobless claims rose more than expected in September's final week, and the unemployment rate for the month rose slightly. The only reason it didn't rise in August as well, says New York University professor Nouriel Roubini, is that "500,000 discouraged workers left the labor force and did not show up as unemployed."



http://money.cnn.com/2007/10/15/news/economy/colvin_buyingbinge.fortune/index.htm
 
<p>hs_teacher - I am inclined to agree. Saw a video with one economist that put it this way - let's say you need a certain sized house (ex. to fit your family of 4 say). If the price of housing goes up, you are no wealthier, as if you sold your house for a family of 4, you'd just need another one which you'd have to repurchase at the higher price. Same logic goes for price of housing dropping. The housing prices going up and down don't make you any weathier or less wealthy unless you 1. actually sell and 2. don't need a house like that anymore (ex. downsizing, job moved to a cheaper area, or what have you). </p>

<p>I think this logic is why usually, when there is a downturn, housing prices stay flat for several years - people hate to sell at a loss, or if they don't have to sell, they don't and the prices do not drop.</p>

<p>However I think this time it is different. People are still disinclined to sell at a loss ... but their loan just reset and they can't afford the new payments and can't refinance. The bank is inclined to foreclose and sell.</p>

<p>So this time, it's going to drop and drop hard and fast.</p>
 
<p><strong>Capital One Reports Loss From Closing Mortgage Unit</strong></p>

<p><a href="http://www.washingtonpost.com/wp-dyn/content/article/2007/10/18/AR2007101802454_pf.html">http://www.washingtonpost.com/wp-dyn/content/article/2007/10/18/AR2007101802454_pf.html</a></p>

<p>Capital One reported an increasing number of delinquencies and defaults in both the credit card and auto finance sectors. As a result, the company said its expenses associated with covering bad loans have increased.</p>

<p>...</p>

<p>The credit card business remained profitable for Capital One, with earnings up 21.5 percent from a year earlier. The company said rising delinquencies were largely a result of changing credit policies. This summer, Capital One told some customers that it would raise the interest rates and alter the grace periods on their credit cards.</p>

<p>In auto finance, the company said a combination of tighter credit and rising delinquencies contributed to a loss of $3.8 million.</p>

<p>There are signs that the collapse in the mortgage markets has taken a toll on consumer spending, said Scott Hoyt, director of consumer economics at Moody's <a target="" href="http://www.washingtonpost.com/ac2/related/topic/Economy.com+Inc.?tid=informline">Economy.com</a>.</p>

<p>"Consumers for a while were using their housing as ATM machines," he said. Now they have increasingly turned to credit cards as a source of money, he said. Consumers already have considerable debt and may not have room to borrow more.</p>

<p>"If [credit card issuers] were to cut back significantly, that would have the potential to be a blow to spending," he said.</p>
 
I think there are a number of Stanley Johnson's out there... from Lending Tree <a href="http://www.youtube.com/watch?v=hn5EP9StlVA">(youtube video)</a>. All that debt rolled into a refi, but that doesn't cure the disease, just promotes it. I'm sure credit card companies are see huge profits. When a customer misses a payment those interest rates shoot up to ridiculous levels.





If you can't make your mortgage payment, don't take out money out of your credit cards. You'll need access to some credit after your foreclosure. Don't make things worse by taking out cash advances at 25-33% interest rates that you can't afford to even pay back.
 
Ok, time has passed. What are car sales at now?



Reading these old posts is eerie.



The mkt went down 366 or so points. I'm mostly out.



I think the overshooting at the bottom will be in evidence. Intel had unexpectedly very good profits, and hardly got rewarded for it at all.



Capital One raised my rate enormously. I switched to another card, with an introductory rate of 0. I know serial card-switchers.



A friend who moved back to her house, which she had rented, after a divorce, needed some furniture & appliances. She got fabulous deals, couldn't believe how cheap everything was. A sign of retail desperation. I got a 50% off card from Barnes & Noble, and there is an expensive Spanish Intermediate disc course I've had my eye on that they won't be making any money off of.



We've cut down on eating out a lot; mostly in search of better nutrition and less fat. But when we see the restaurants half empty, we know everyone is hurting.
 
Auto Sales: <a href="http://online.wsj.com/mdc/public/page/2_3022-autosales.html" target="_blank">http://online.wsj.com/mdc/public/page/2_3022-autosales.html</a>
 
Lawerliz....don't forget you need to take into consideration the rebates and all the other "financing" that car dealerships are giving right now. I just heard on the radio that an exotic car dealership is actually paying for your first 3 months worth of payments. Not much but anything they can do to drive traffic in they will.
 
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