Of Course People Aren't Buying Homes

The National Association of Realtors said Tuesday morning that existing home sales fell 27.2% in July to a seasonally adjusted annual rate of 3.83 million units. Economists had expected the figure to come in at 4.72 million units, compared with a downwardly revised 5.26 million in June. The Street

People aren't buying homes because they don't have a job or don't feel secure enough in their jobs to pay a mortgage, and they aren't getting easy home loans anymore.

That's as it should be.

In the lead up to the recession, companies were building, building, building just to build. Of any business, developers should've realized that there weren't going to be enough customers. But we were all so greedy then.
People aren't going to start getting jobs until companies need to hire and companies aren't going to need to hire until people start wanting more stuff.

But people have cut back their consumption of stuff and they're making do with what they have and perhaps, they've even learned that spending beyond their means is only fun for a little while. Perhaps, they're learning they don't need so much stuff.

That's as it should be.

Recovering from this recession is going to be a slog because we were in a giant bubble. The perceived pre-recession prosperity was phony.

The president can't do much more.

With financial reforms, he did what he could to prevent Wall Street from taking advantage of our greed.

Congress can't do much more. Republicans certainly don't have the solution.

Giving more tax cuts to businesses or the wealthiest isn't going to help matters. It only gives more money to the people who already have it.

Business tax cuts don't make people buy more things.

A business isn't going to start up just because of low taxes. There has to be a reason, demand for its goods or services.

Businesses aren't going to hire more people unless there is demand for their products and services.

People just aren't demanding as much as they used to AND they're saving money AND paying down debt.

That's as it should be.

Note that corporate America seems to have adjusted to the new reality. They've cut costs and staff and are making profits again.

But profits doesn't equal more jobs.

Only a boost in demand will result in more jobs. Companies have to reach a tipping point where they can't deliver with the staff that they have.

Giving free money to the wealthy doesn't inspire wealthy to buy either. They can already buy whenever they want. Giving the wealthy tax breaks just gives them free money.

The economy could permanently retract. For sure, it's transitioning. The economy isn't sustainable if it's all about consumers buying stuff, the way it has been.

We just have to adjust and do what we can to help those who need extra help.

Neither democrats nor republicans can make things better.

Only we can do that for ourselves.