Pending Home Sales Fall By Most Since 2010, Capacity Utilization Still Below 80%

Confounded Interest ^ | 10/28/2013 | Anthony B. Sanders

[whitedog57]

Pending home sales in the USA fell 5.6% in September, the biggest drop since 2010.

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Of course, the rise in the US Treasury 10 year yield has cooled off pending home sales.

phsmortgagesept13

Meanwhile, capacity utilization in the USA rose to 78.3%, shy of the point when The Fed has historically raises The Fed Funds Rate Target to cool down the economy.

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Back in the Reagan Recovery in the 1980s and the Clinton Recovery in the 1990s, we saw capacity utilization rise above 80% signalling an over-heating economy. And The Fed reacted with increases in The Fed Funds Target rate. But during the Bush Recovery, capacity utilization barely cleared 80%. And in the Obama Recovery, it has yet to rise above 80%.

Well, we don’t have to worry about an overheating economy since the Great Recession!

[whitedog57]

It hasn't passed 80% under Obama, our genius economic leader!

[dangus]

So here’s the question: Why did the federal reserve invert the interest rate curve when the capacity utilization rate was barely over 80%, in 2006? The federal reserve raised the discount interest rate from 1% in 2002, to 5.25.

[SC_Pete]

Dear Mr. Obama and Tom Friedman:

Sharing the pie doesn’t make pies. Baking the pies makes pies. If you bake pies, you can share pies. But if you don’t bake pies, there are no pies to share.

I trust this economic analysis is dumbed down enough for Washington DC.