Retail sales disappointed in July and the number of newly laid-off workers filing claims for unemployment benefits rose unexpectedly last week. The latest government reports reinforced concerns about how quickly consumers will be able to contribute to a broad economic recovery.
I've been saying for several months that the economy is not in recovery mode. I expect these figures to be revised downward in the months ahead. Meanwhile, rising mortgage rates will prevent home prices from recovering:
U.S. mortgage rates rose in the latest week as Treasury yields climbed, according to a survey released on Thursday, a move that may dampen home loan demand.
This what happens when you flood the bond market with Treasuries to pay for wildly unsustainable federal spending. They crowd out every other form of fixed income investment and force issuers to ramp up yields to make their paper attractive. Banks facing higher debt costs are then forced to raise mortgage rates to cover the cost of that debt.
I do not see a bottom in this recession.
