I’m posting two pieces from the news for the political component of the economic story, and not just because I enjoy spreading around bad news:
First from MSNBC:
Sales of existing homes fell for the eighth consecutive month in October, with median home prices falling by a record amount. Analysts blamed the worsening housing slump on the credit crunch that hit in August.The National Association of Realtors reported that sales of existing single-family homes and condominiums dropped by 1.2 percent last month to a seasonally adjusted annual rate of 4.97 million units.The median price of a home sold last month declined to $207,800, a drop of 5.1 percent from a year ago, the biggest year-over-year price decline on record.
Second a quip from The Financial Times (subscription required):
Three months ago it was reasonable to expect that the subprime credit crisis would be a financially significant event but not one that would threaten the overall pattern of economic growth. This is still a possible outcome but no longer the preponderant probability.
Even if necessary changes in policy are implemented, the odds now favour a US recession that slows growth significantly on a global basis. Without stronger policy responses than have been observed to date, moreover, there is the risk that the adverse impacts will be felt for the rest of this decade and beyond.
The U.S. economy is clearly no better now than most people think that it is, and polls show public sentiment on the economy to be negative, just as they show public sentiment on the Republican Party to be negative.
In 1992, Bill Clinton probably needed both an economic downturn and Ross Perot to beat the Bush incumbency. In 1980, Reagan needed both the hostage crisis, and the stagflation that had engulfed the economy to unseat Carter. In 2008 there will be no incumbency for anyone to benefit from, and almost certainly the most dire economic conditions since the thirties. That will be combined with a war that may have slowed to a low boil at best, and with energy costs that will be both wildly unpopular, and blamed on the party in the Whitehouse.
If this is not a recipe for a regime change, then that scenario has never been written. Hopefully, then, the reality that the Democratic Primary is choosing the next President will be seen to be reason for redoubling efforts between now and next November, rather than as an excuse for relaxing as the GOP continues to struggle for loyalty.