Bad News About the Good News (Editorial)

News about the improvement of several economic indicators buoyed our mood last week, but it was the nature of that improved mood that gave us pause.

First, the good news:

  • The Arkansas Realtors Association said that home sales in the state rose 7 percent in March while the average price of those homes sold increased by 5 percent.
  • March sales of new homes also rose nationwide, hitting a seasonally adjusted annual rate of 417,000. That prompted The Associated Press to write about the potential for a housing shortage. “The shortage of homes is occurring just as ordinary Americans want to buy again. More of them feel confident about their job and retirement account. Mortgage rates are near historic lows. And prices are rising again, easing fears that new buyers might lose their investment in a home.”

These developments support columnist Craig Douglass’ contention that housing is leading a general economic upturn.

But we’ve been here before. Long ago — May 8, 2006, to be precise — an Arkansas Business editorial also took cheer from a flurry of reports detailing good economic news.

And we know how that turned out.

So for the bad news, if you can call it that: We remain circumspect about recovery, much like those responding to the monumentally unscientific but still interesting ArkansasBusiness.com poll. Asked “Do you think the housing market has recovered,” only 15 percent of our readers unreservedly say, “Yes. All signs point to a healthy market.” The other 85 percent come down on the side of “no” or “we don’t know yet.”

Such hesitancy is likely to be our new normal because, well, unrestrained enthusiasm about the economy is so last decade.