Bernanke's Fed on housing: Contraction is 'ongoing'

Most of you already know the Federal Reserve today left interest rates unchanged. For those who enjoy parsing Fed statements, here's what the Fed's Open Market Committee has been saying about housing over the last 20 months. To make things interesting, I've added, in parentheses, DataQuick's median sales price for L.A. County for that month.

January 2007 ($520,000): "...some tentative signs of stabilization have appeared in the housing market."

March 2007 ($540,000): "... the adjustment in the housing sector is ongoing."

May 2007 ($550,000): "...the adjustment in the housing sector is ongoing."

June 2007 ($545,000): "Economic growth appears to have been moderate during the first half of this year, despite the ongoing adjustment in the housing sector."

August 2007 ($550,000): "...the housing correction is ongoing."

September 2007 ($525,000): "... the tightening of credit conditions has the potential to intensify the housing correction."

October 2007 ($500,000): "... the pace of economic expansion will likely slow in the near term, partly reflecting the intensification of the housing correction."

December 2007 ($470,000): "...incoming information suggests that economic growth is slowing, reflecting the intensification of the housing correction."

January 2008 ($458,000): "... incoming information indicates a deepening of the housing contraction." 

March 2008 ($440,000): "...the tightening of credit conditions and the deepening of the housing contraction are likely to weigh on economic growth over the next few quarters."

April 2008 ($435,000): "...tight credit conditions and the deepening housing contraction are likely to weigh on economic growth over the next few quarters."

June 2008 ($415,000): "Tight credit conditions, the ongoing housing contraction, and the rise in energy prices are likely to weigh on economic growth over the next few quarters."

August 2008 (n/a): "Tight credit conditions, the ongoing housing contraction, and elevated energy prices are likely to weigh on economic growth over the next few quarters."

So we've gone from "signs of stabilization" to "adjustment" to "deepening contraction" to "ongoing contraction."  Is "ongoing" better than "deepening"?

--Peter Viles
Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo: Federal Reserve Chairman Ben Bernanke takes in a baseball game. Credit: Associated Press

Comments

[Laker]

Ben was in denial stage for so long...he is like the average home seller / loan owner first trying to convince himself that prices are flat, then getting slightly down..then ongoing down...finally he will recognize capitulation and try to get rid of his property.
We are not there yet, sure not in LA.

[mike]

how can he comment without the august numbers?????

[Giacomo]

Couldn't we just get a monkey with a Magic 8 ball ?

[jb]

Everyone knows that the whole system is crooked - Ben is in bed with Wall Street, our politicians are rescuing Fannie/Freddy, etc. Private gains, public losses - no, we will not take it - It is time to rise up and burn this system to the ground.

[Nick]

As dumb as the Fed's statements are, it's the ongoing damage to the US economy by (among other things) propping up failed financial companies instead of letting them fail, and giving out easy money/credit to fuel speculative bubbles, which is ultimately the most destructive long-term. If they weren't busy trying to payoff lender bribes with taxpayer money (or taking vacations, as the case may be), Congress should really re-task the Fed with controlling actual inflation, instead of failing to control inflation expectations by talking tough about it while giving out money hand over fist. Criticizing the Fed's statements as utter BS is kinda like pointing out that the blood covered psychotic mass murderer has bad fashion sense: it might be true, but there are much greater flaws to worry about.

[Rational Renter]

Ah! I finally figured out what the Fed does! They work diligently to come up with new adjectives for "bad"!

[Michael Snyder]

Two economist pass each other on the street. One says "Good morning" and the other replies, "Hello." As the go their separate ways they unknowingly share a common thought: "I wonder what he ment by that?"

[LA]

Two months of "stabilization."
Five months of "adjustment."
Five months of "correction."
Seven months of "contraction."

This recession has more spin than my washing machine.

(Giacomo - good one!)

[E]

Two months of "stabilization."
Five months of "adjustment."
Five months of "correction."
Seven months of "contraction."

---------------------------------------------------------------

Then we have years of "I think we're at the bottom" stage.

[Fourth Generation]

Isn't this system great or what? The Fed bail out the greedy/rich/filthy speculators/investors from Wall Street releasing their money from the failed housing "bondage" allowing those same scumbags to turn their money/attention into oil speculation. Resulting ultimately in the creation of the oil bubble that inflated the price of crude to the stratosphere. And now that oil is coming back down it will remain at very high prices no matter what. Welcome to the USA capitalism where you have goverment of the rich, by the rich for the rich.