CONSUMER CONFIDENCE
What’s Happening
It’s bad, and getting worse. Last month’s confidence levels from the Conference Board were the lowest since 1992.
What Could Happen
Naysayers have always warned we couldn’t continue our borrow-and-spend ways forever. But until recently, Americans always shopped themselves out of economic doldrums. Now that houses are losing value and a recession is looming, they might just stop spending.
How Much It Hurts Us
Perhaps less than you’d think. Things might be bleak in flyover country, but New York can always count on the open wallets of foreign visitors to perk up our spirits. East of the Hudson, the worst might be behind us.
THE DOLLAR
What’s Happening
The greenback fell to a record low against the euro last week ($1 buys you just .62 euros). Theory always said we couldn’t run both trade deficits and budget deficits forever, and now we’re seeing why. Add in the Fed’s aggressive interest-rate cuts, and you’ve got a currency no one wants to own anymore.
What Could Happen
Pessimists see the dollar falling a whole lot further: What happens if China decides to unload some of its $500 billion in Treasuries? In the meantime, expect more foreigners buying New York real estate and more Americans to take dollar-denominated vacations. So long, Euro Disney; hello, Disney World.
How Much It Hurts Us
What’s bad for New Yorkers (expensive imports; astronomical overseas vacations) is good for New York (euro-wielding tourists keeping real estate and retail humming). Stay Stateside, buy American, and you’ll be fine.
HOUSING PRICES
What’s Happening
Housing prices at the end of the first quarter of 2008 were 16 percent off their 2006 highs. But that’s just an average decline. Some markets are down more than 50 percent in the past year alone. “Hey, it could be worse,” The Wall Street Journal said last week to homeowners trying to sell. “You could be selling a Hummer.”
What Could Happen
Despite the common misperception that housing prices can only rise in the long term, there’s nothing to say things can’t get much, much worse, particularly if mortgage money stays tight. But there was one positive sign: The (very high) housing inventory reported last week had increased less than predicted. Take your small blessings where you can get ’em.
How Much It Hurts Us
If you own your house and don’t plan to move in the next ten years, you don’t care at all. If you’re thinking of buying, you’re probably pretty psyched. If you’re thinking of selling, think about something else for now.
OIL PRICES
What’s Happening
Oil prices have been flirting with $150 a barrel, up from under $30 just five years ago. While a few “peak oil” scaremongers have been predicting this for years, pretty much no one else—not even the Saudis, awash in an ocean of oily wealth—saw it coming.
What Could Happen
No one knows. Some used to think $100-a-barrel oil would mean the end of civilization. Most analysts see the current skyrocketing price as the result of booming demand. But what if we really are running out of oil?
How Much It Hurts Us
Non-driving New Yorkers think they have it easy. But your Con Edison bill is marching upward, the MTA’s getting slammed, and anything trucked into the city—which is basically everything—will only get pricier.
WALL STREET PROFITABILITY
What’s Happening
Financial companies have already announced more than $200 billion in write-downs. Now Fannie and Freddie are taking handouts, and Merrill Lynch and Citigroup keep announcing bad news. (Citi stock hit a ten-year low last week.) Financial stocks are down almost 50 percent in the past year.
What Could Happen
Wall Street pros are supposed to predict the future, but few saw this coming. Credit cards and auto loans could be next. The age of the independent broker-dealer might be ending. (Except for Goldman, which will undoubtedly live on, like a moneymaking cockroach.)
How Much It Hurts Us
Wall Street is New York’s most important industry. You might not miss the obnoxious i-bankers when they’re gone, but restaurants and dry cleaners and just about everyone else will—including the city, dependent on their tax dollars.
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