The adverb that begins with a "U" made yet another appearance yesterday in connection with an economic report. The related noun that begins with an "S" came along for the ride.
The news concerned sales of new homes. They fell "Unexpectedly" to their lowest level since 1963, when the U.S population was about 40% lower. The decline was a "Surprise" to economists, who had predicted an increase.
It continues to fascinate that the "Unexpected" news that came as a "Surprise" to economists during a large portion of the Bush 43 administration more often than not was to the upside, while the trail of "Unexpected Surprises" during the current administration is littered with downers.
Ahead of the news, the Associated Press appeared ready to play up what it thought would be good news, and then exiled its reports to remote corners when things didn't go as expected.
In a Thursday afternoon story on the small rise in the Case Schiller home price index, the AP's Adrian Sanz was talking of recovery, while inventing a new economic concept (bold is mine):
Home prices rise 0.3 percent in December
Home prices edged up in December, the seventh straight monthly gain and another sign the housing market continues its bumpy recovery.
... for homeowners who currently owe more on their mortgages than their properties are worth, rising prices will rebuild equity.
...Home sales data for January, out later this week, are also expected to show gains over year-end levels as buyers took advantage of low interest rates and temporary tax credits.
I hate to break it to you, Adrian, but if you're underwater on your mortgage, rising prices, especially given the tiny one you reported, serve almost entirely to reduce negative equity. To "rebuild" equity, you first have to have some.
The next morning, an unbylined AP report also anticipated the home sales gain:
New home sales likely posted a rebound in January but economists are worried that the housing recovery could be headed for tougher times once government support ends.
Economists surveyed by Thomson Reuters expect sales of new homes rose 5.3 percent in January to a seasonally adjusted annual rate of 360,000 units. The Commerce Department will release the report on new home sales at 10 a.m. EST Wednesday.
Out came the report (the PDF press release is here), and the AP moved the news into a brief "Summary Box," the kind that I suspect doesn't get picked up by subscribing outlets as often as regular narratives:
RECORD LOW: Sales of new homes plunged 11.2 percent to an annual sales pace of 309,000 units in January, the lowest level on government records going back to 1963.
The "S-word" made its appearance in a multi-item "Business Highlights" summary:
Sales of new homes plunged to a record low in January, underscoring the formidable challenges facing the housing industry as it tries to recover from the worst slump in decades.
The Commerce Department reported Wednesday that new home sales dropped 11.2 percent last month to a seasonally adjusted annual sales pace of 309,000 units, the lowest level on records going back nearly a half century. The big drop was a surprise to economists who were expecting a 5 percent increase over December's pace.
Sales of new homes unexpectedly fell to a record low in January while demand for loans to buy homes hit a 13-year low last week, fanning fears of renewed weakness in the housing market.
Interestingly, the Reuters paragraph just excerpted differs from what Karl found there when he did his post:
Sales of newly built single-family homes unexpectedly fell to a record low in January, according to government data on Wednesday that hinted at potential trouble for the fragile housing market recovery.
Karl's questions in response to what he saw still stands, though in revised form. His question was, "Potential trouble? Really? Mine, in light of the revision, would be, "Renewed weakness? When did the weakness ever stop?"
The new home sales news is nowhere to be found in the AP's current video rotation at its business stories. Oh, but there is an item with a smiling picture of the president about how foreclosures have declined (could they possibly have gotten any worse?). Additionally, consistent with what I noted three weeks ago (at NewsBusters; at BizzyBlog), seven of the 11 vids in AP's rotation are about Toyota's troubles.
One would hope that the economists who continue to get their predictions wrong, and the media outlets that carry them, are going to recognize that what the Wall Street Journal and Investors Business Daily have been referring to as "the Uncertainty Economy," and which I have personalized by calling it the "POR (Pelosi-Obama-Reid" economy" has cast a pervasive pall over the entire economy, and must be considered in some way when formulating predictions.
Until it is, we're going to keep seeing "Unexpected Surprises."
Cross-posted at BizzyBlog.com.