2:30pm | I remember in the old days of caramel apples and ice cream cones when the phrase “double dip” brought a smile to one’s face. Now, thanks largely to a stock market plunge and economic woes dragging on the economy in Europe and abroad, the phrase brings feelings of dread to those of who know its economic meaning. If you don’t know what double dipping means, click here.
“I’m worried still about the risk of a double-dip,” economist Robert Shiller said in an interview that appeared on Tuesday in the San Francisco Chronicle. The Chronicle story, which starts out by stating, “The housing slump isn’t over,” notes that tax credits and rock bottom mortgage rates have failed to lift home prices this year. In fact, prices fell 0.5% in March from February, according to the Standard & Poor’s/Case-Shiller 20-city index released Tuesday.
The article goes on to state: “The co-creator of the Case-Shiller index, who predicted in 2005 that the housing bubble would burst, is raising concerns that the worst may be ahead. That fear is shared by other economists who point to weak job growth, tight credit and many more foreclosures ahead.”
A separate report released on Tuesday by the Federal Housing Finance Agency shows U.S. house prices fell in the first quarter. FHFA’s seasonally adjusted, purchase-only house price index, which uses home sales price information from Fannie Mae- and Freddie Mac-acquired mortgages, was 1.9% lower in the first quarter than in the fourth quarter of 2009. Over the past year, seasonally adjusted prices fell 3.1% from the first quarter of 2009 to the first quarter of this year. FHFA’s seasonally adjusted monthly index for March rose 0.3% from February. That was the first monthly increase since November, according to FHFA.
The now dirty “double dip” phrase is on a lot of minds. A Google News search yields thousands of results, with varying headlines like Home Price Declines Spur Fears of a Double Dip, and Fears of debt and double dip and Don’t Rule Out a Double Dip Recession. Here’s a drastic, if not creative, headline: Europe Slipped on Greece and Broke the World.
Most of the negative news forecasts and reports baring the ominous phrases “double dip” and “double dipping,” or “double-dip” in some cases, tend to focus on the troubling economic turmoil in Europe and abroad.
A few stories are emerging to argue the contrary—that a double dip recession isn’t in the U.S. economy’s future. The InvestmentNews headline Why we’ll skip a double-dip, for instance, offers some mostly optimistic views on the economy.
Many real estate experts I’ve spoken with believe that the housing market is either rebounding, or at least bottomed out, as banks continue to release foreclosed properties at a slow rate—like letting a small bursts steam out in small spurts to keep a boiler from exploding—as consumer confidence slowly returns and as the economy continues to create, not shed, jobs. Although, a good number of experts have indicated concerns that a flood of foreclosures is coming, and now that the homebuyer tax credit is expired, there will be no “artificial inflation” of the housing market to keep if from regressing into the woes of yesterday.
In fact, an Associated Press story on Tuesday, Consumer confidence rises in May, states the “Consumer Confidence Index rose to 63.3, up from April’s revised 57.7,” higher than the 59 economists surveyed by Thomson Reuters had expected.
“The increase was boosted by consumers’ outlook over the next six months, one component of the index, which soared to the highest level seen since August 2007, before the economy entered in a recession,” the AP story states.
While “improving” is the key word when one talks about “improving consumer confidence”—a reading above 100 signals strong growth—when one considers consumer confidence was at around 25 early last year, it could safely said the U.S. is headed in what seems to be the right direction.