The great utopia of lowered expectations.

I haven't written about the economy lately because interest rates had been kissing 4% for about the last three weeks. I'd been biting my nails to see if this rate could hold. Because ya know..... the Fed has been insisting they were going to raise interest rates this summer. And I sort of think it would be funny if the Fed did raise them. I mean, it would be the first time ever possibly the Fed has tried to raise rates when the underlying economy is so weak. I've grown tired of caring - so lets rip off the band-aid and get this party started.

This morning when new housing starts came out and the media was falling all over themselves about how starts had "surged", I basically rolled my eyes. Before I looked at the data I said to myself - if true - finally! We've been at recession level building for roughly seven years now. The longest stretch since at least the 1960's. At some point there is going to have to be a building boom to account for that. I doubt it will be under this administration, but you never know.

At any rate - this amazing "surge" barely sticks us over the low end of this historical average as you can see from this handy chart. A healthy economy averages roughly 1.5ish million units. We aren't even banking a million units right now! Seven years into a recession.




Now lets see what three weeks of 4% interest rates did to mortgage applications.



Oh dear! Said in the most sarcastic way. That totally looks like the Fed will easily be able to raise rates. No probs. You can tell the banks are really struggling at the 4% point because yesterday and today rates had fallen back into the 3.80ish range. After three weeks of falling apps they caved.