Disappointing New Home Sales and PCE

New home sales unexpectedly fell 11% in November to an annual pace of 355,000 and the median sales price declined by 1.9% from a year ago. Furthermore, October was revised down from 430,000 to 400,000. As Calculated Risk points out, in November 2009, a record low 25,000 new homes were sold, beating the previous record low of 26,000 in November 1966. Yes, you have to go all the way back to 1966. Were they even making new homes back then? If so, I think Toll was building the main house and Beazer would install the outhouse for you. In any event, this is a very weak report that puts a major damper on yesterday's more robust-appearing existing home sales data.

Personal income was up 0.4%, disposable income was up 0.5% and personal consumption expenditures were up 0.5%. The personal savings rate as a percentage of personal income was 4.7% in November, unchanged from October. While a higher savings rate is good for the long run, economic growth today is dependent on spending, spending and MORE SPENDING.

In honor of the weak personal consumption report and given that it is two days before Christmas, I'm asking all of you to do your patriotic duty and go stimulate the economy. Buy something significant. Like a car, for example (maybe in the shape of an Audi, preferably in red?) Or a new house. You can worry about getting a job in the New Year.

Posting will be light and sporadic for the next few weeks. Happy Holidays!