US new home sales fall 33%

The blog is in gloomy mood today, in spite of last night’s England World Cup win. Not because Wall Street ‘analysts’ maintained last month’s 33% drop in US new home sales was ‘unexpected‘. Nor even that the consensus forecast is still for 700k housing starts this year, when current data suggest that last year’s 560k total may actually prove hard to beat.

Its gloom is due to its perception that most policymakers seem totally unprepared for the possibility that things might get worse in H2. Of course, its good to be optimistic and hopeful. But after the events of the past 2 years, it would surely be only prudent for them to consider a Downside scenario?

Hopefully, chemical companies have not fallen into the same trap with regard to contingency planning, given the importance of housing to overall sales. To help with this process, the blog strongly recommends the above CNBC interview with Meredith Whitney, the only US bank analyst to correctly forecast the downturn.

She may not be right with her forecasts of a further decline in housing markets and consumer spending, and an increase in bank write-offs. But, like the ECRI indicator, her track record is hard to beat.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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