The new ACC weekly report rightly notes that “any economic recovery will likely begin with a turnaround in the residential housing situation”. This is also the critical issue for the chemical industry, still reeling from last week’s Lyondell bankruptcy filing. Yet as the ACC’s chart shows above, no improvement is yet in sight. New home inventory is now 11.5 months, compared to just over 9 months in the early 1990′s recession.
Stock markets have been hopeful that the new ‘American Recovery and Reinvestment Plan’, being proposed by President-elect Obama, will mark a turning point. But a new analysis by the incoming Administration of its own Plan does not build confidence.
One can certainly praise the authors for their honesty, but it is disturbing to find them emphasising that “all of the estimates presented are subject to significant margins of error”. In fact, the blog counted 9 uses of the word “uncertainty”. And the conclusion of the Executive Summary is that “uncertainty is surely higher than normal now”.
The blog will judge the Plan, when it is finally published, on the same basis as it judged the earlier $700bn TARP plan. Will it “do anything about the excess supply of homes and the large number of mortgage borrowers in dire straits”? For the moment, the signs are not hopeful.