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Even while dancing on the edge of the Great Abyss one should keep one's eye on the numbers. In this case, the key indicators that presage an economy at risk of totally imploding. Sure, the auto sales numbers were no worse than grim expectations and the ISM manufacturing number was actually a positive. But, oh, we have lots of nasty numbers to go around. Start with the RevPar number. That's short for revenue per available room at hotels and is a solid indicator of the health of the travel industry, as well as the state of business travel spending. The number? Down a stunning 15.3% in the month of January, year-over-year.
How about residential real estate? Delinquencies keep rising. Just hit 6% and could go well north of 10%, according to some of the smarter hedge fund managers who are tabulating what happens when the massive group of Alt-A and Option ARM mortgages hit reset just as people are losing jobs in the upper middle class. Another key number to watch is commercial real estate defaults. The rating agencies are calling for defaults below 10% of total loans. Some of the hedge fund operators who originally shorted the residential mortgage markets are now calling for a whopping 25%-50% decline in value of U.S. commercial real estate and defaults on loans in the 20% and up range.
Alex Salkever is the Director of Research at Piqqem.com, a "Wisdom of Crowds" stock research and investing community.
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Reader Comments (Page 1 of 1)
3-04-2009 @ 9:18AM
Warren said...
So what is the point of this particular column? We don't have enough negativity in the air that you needed to invent a new column that does nothing but fear monger and discourage people further?
Honestly.
Those 2 paragraphs do nothing except reinforce that we're in trouble. Yeah, thanks, I get that. It's fairly obvious from reading EVERY OTHER ARTICLE on this blog.
Come on, people.
3-04-2009 @ 10:29AM
David said...
I think the article was meant to bring to light another problem that will be facing our economy in the short term...the reset of Alt-A and Option Arm mortgages. I find it interesting that we haven't heard more about this in the media. However, when these reset, will they reset lower ? Mortgage rates are lower than they were 2-3 years ago.
We could catch a little bit of a break with this one, depending on what rates these mortgages reset at.