"Disaster On The Horizon"???

clipped from www.slate.com The wealth effect fallacy helps explain how, on the same day the Fed reported a second quarter of falling wealth, chain store retailers last Thursday reported stronger-than-expected sales in May. Some credited federal rebate checks for keeping spending growing, but the fact is that except for cars and gas, month-on-month same-store chain retail sales have grown throughout 2008 as home equity has fallen. Levkovich says that rising energy costs and poor job growth play a much bigger role in determining spending than personal housing wealth. Falling home prices will continue to be a political issue this year, especially as Americans judge the respective proposals of John McCain and Barack Obama to help homeowners stranded by mortgages they can no longer afford. But those falling prices don't automatically mean we're in for economic payback—however ominous the headlines. As Backus says, "It's a better story if there's a disaster on the horizon."