Money Talks

Money may talk, but sometimes it's only a whisper. Listen up.

The market is great! -- Willy Loman.

All things are for the best in this best of all possible worlds. -- Dr. Pangloss.

   So maybe we're not going broke after all, but sometimes it seems that way, especially if you're not a one-percenter. Data just issued show increases in income and spending, as well as easier lending standards and a pickup in loan demand.
   The total of personal income in America rose by $56.7 billion in June, the government reported, and disposable personal income increased $51.5 billion. Both amounted to raises of 0.4 percent, according to a Bureau of Economic Analysis report.
   Spending also rose, the BEA said, increasing $51.7 billion in May, or 0.4 percent. After allowing for inflation, income and expenditures both rose by 0.2 percent in June.
   Separately, the Federal Reserve Board said a survey of senior bank loan officers showed an easing of standards for commercial and industrial loans, as well as a broad-based jump in demand for loans. Real estate lending, however, showed a mixed picture, according to the survey. But most banks reported little change in standards for consumer loans, the Fed said.
   Meanwhile, applications for home mortgages rose 2.4 percent in mid-July, according to the Mortgage Bankers Association, with the average nationwide interest rate little changed, at about 4.3 percent.
   As for sales of homes, they're up for the first time since last October, said the National Association of Realtors, to an annualized pace of 5 million homes, posted in June. That's up 2.6 percent from the May sales rate.
   However, construction of new homes is off, according to government figures. The Census Bureau reported a 4.2 percent drop in building permits issued in June, to an annualized pace of 963,000. And housing starts were down by 9.3 percent from the month before, to an annual rate of 893,000.
   Taken together, the numbers say things are looking up, assuming you have the wherewithal to take advantage of improving conditions, except that an increase in demand for homes and a decrease in construction will mean a lower supply, thus causing higher prices.
   So if you have a good job and your situation looks secure, jump in, says Willy Loman, who believes the market is always great. If you don't, welcome to the wonderful, wishful, waiting world of those who want a good job and a nice house but can't afford to jump in. That's why the homeownership rate in America has fallen to a 19-year low because of higher prices and stiff credit rules. As it is, 64.7 percent of Americans own their own homes, a notch down from the 64.8 percent recorded in the first quarter of this year, according to the U.S. Census. It reached a high of 69.2 percent ten years ago.
   But the good news is that homeownership in America is quite high compared to what it was many years ago. In 1900, the rate was 46.5 percent, according to Census records, and the Great Depression drove that percentage down to just 43.6 percent in 1940. The post-war boom and government-sponsored loan assistance programs helped to boost that to its current levels.
   Now the question is whether a return of the Great Recession and a growing inequality of wealth between the 1 percent and the rest of Americans will pummel the Great American Dream once again.