Home Sales Plunging, Car Sales Next

I won't rehash the home numbers - no surprise there unless you've been in a cave the last half year. But the next shoe to fall with unfortunately, I believe be car sales.

I am quoting the below from Realmoney:

• The Conference-Board's survey nonetheless contains significant reasons for concern, particularly steady decline, as well as decreased plans to buy homes and cars and a sharp jump in inflation expectations.
• Plans to purchase a new home, for example, fell to 2.5% of respondents, its lowest level since June 1994, only a tenth of a percentage point above the lowest level seen since 1983. (not good, but not a surprise - again in early innings of multi year contraction in housing)
• Plans to purchase a new car were even worse, with only 4.7% of respondents planning to buy a car, a tenth of a percentage point above a 40-year low. This reinforces the recent pattern in car sales, which have weak all year. (bad, and getting worse)
• Weakness in car sales has led to weakness in automobile production, hurting states in the east north central part of the country, where the Conference-Board's confidence index was at just 55.9 in November, by far the lowest of any region in the country, with the next lowest reading in the New England states, which was at 79.3 in November. (maybe this is why I am such an ornery blogger)

Again, even though the quality of jobs in this country is degrading as we go to a lower paying service economy - at least they are still existing. I do expect unemployment to rise into 2008; it's just a matter of degree. CNBC for example was reporting potential 45K job losses (out of 300K total) at Citibank yesterday. What really worried me about that was in general, the Street being a heartless SOB usually cheers job cuts (since it cuts costs) but Citibank just kept going down on the news. So "good" news or bad news, when stocks continue down, its the exact opposite of the scenario we enjoyed in late August through early October when stocks went up regardless of good or bad news.

I just find it hard to believe an economy so tied to housing and consumerism will retain jobs at these levels. But this will take time to play out and government reports are useless (magically losing and then revising 80K jobs out of the blue) so we just have to keep an eye out on what individual companies are saying. Obviously financial and housing related jobs will suffer - the question is to what degree this pebble in the pond ripples through the rest of the economy. Still to be determined but by late spring we should have a far better idea for 2008.