Increasingly, if the Democrats want to analyze why they are now sinking in the polls (and votes) you get back to the old slogan: “It’s the economy, stupid.” And the latest economic news is grim, indeed:
Existing-home sales took their biggest tumble in at least 40 years last month as the impact of a buying spree spurred by a tax credit for first-time buyers waned, according to industry data released Monday.
Buyers who rushed to meet the original November deadline to take advantage of a $8,000 tax credit for first-time home buyers caused a surge in sales earlier in the year but left the market wobbly by the end of 2009. First-time buyers, who had made up more than 50 percent of sales earlier this year, were only 43 percent of the market in December. The shift also resulted in fewer sales of lower-cost homes, which first-time buyers typically seek.
After three months of increases, sales of existing homes, including condos and single-family residences, fell 16.7 percent to a seasonally adjusted annual rate of 5.45 million in December compared with the previous month, according to National Association of Realtors data. That was a bigger drop than analysts had expected and the lowest sales rate since August. It was also the biggest monthly decrease on records than begin in 1968, according to the industry group.
The December decline “was payback for the tax credit,” said Patrick Newport, an economist for IHS Global Insight.
First-time buyers rushed to complete deals before the $8,000 government incentive was due to end, pushing sales up 28 percent in the three months to November. The subsequent extension and expansion of the credit to include closings through June signal demand will strengthen in the first half of 2010, while raising the risk the market will then slow anew should jobs remain scarce.
“We’ll see a pickup in existing home sales in the next couple of months,” said Adam York, an economist at Wells Fargo Securities LLC in Charlotte, North Carolina, who forecast a 5.4 million sales pace. Although “we’re past the bottom,” he said, “I don’t think there’s going to be a lot of buyers out there looking for a home outside of the tax-induced effects until they feel more comfortable with the labor market.”
Stocks trimmed earlier gains following the report. The Standard & Poor’s 500 Index was up 0.5 percent to 1,097.66 at 12:01 p.m. in New York. The S&P Supercomposite Homebuilder Index was down 0.6 percent.
It’s bad news such as this, and steadily discouraging news on the jobs front, that lead to poll results such as this:
Nearly three out of four Americans think that at least half of the money spent in the federal stimulus plan has been wasted, according to a new national poll.
A CNN/Opinion Research Corporation survey released Monday morning also indicates that 63 percent of the public feels that projects in the plan were included for purely political reasons and will have no economic benefit, with 36 percent saying those projects will benefit the economy.
Twenty-one percent of people questioned in the poll say nearly all the money in the stimulus has been wasted, with 24 percent feeling that most money has been wasted and another 29 percent saying that about half has been wasted. Twenty-one percent say that only a little has been wasted and 4 percent feel that no stimulus dollars have been wasted.
“One reason why the economic stimulus bill is no longer popular with the American public is the perception that a lot of the money has been wasted. Six in ten believe that the projects in the stimulus bill were included for purely political reasons,” says CNN Polling Director Keating Holland. “Nearly three quarters believe that at least half the stimulus money spent so far has been wasted, and one in five say nearly all of it has been a waste.”
One reason why people may perceive it’s wasted: because such perceptions (fed by the talk show radio political narrative which had the money wasted before it was even signed into law) are not being countered the news stories that suggest that the economy is steadily on the mend. This could change — but until it does Democrats now “own” the existing economy in the minds of many, no matter what contributions the Bush administration made to the current state of it. And until there are changes, the Democrats’ battle will be increasingly tough…
Joe Gandelman is a former fulltime journalist who freelanced in India, Spain, Bangladesh and Cypress writing for publications such as the Christian Science Monitor and Newsweek. He also did radio reports from Madrid for NPR’s All Things Considered. He has worked on two U.S. newspapers and quit the news biz in 1990 to go into entertainment. He also has written for The Week and several online publications, did a column for Cagle Cartoons Syndicate and has appeared on CNN.