A Better 2009?

The terrible economy was 2008’s big story. It shaped the election outcome, as Iraq faded from the headlines. The U.S. is deflating a housing bubble, and this deflation means the rest of the U.S. economy and the world suffers. We are looking, looking for the housing market’s bottom. New housing construction has ground to a halt, having hit an all-time low in November, while increasing foreclosure sales continue to cut off normal market operations.

The stock market is a leading economic indicator. When we have a sustained market rally, probably only after the housing market hits bottom, that should be our signal recovery is underway. Right now, today, stocks are up. Prices are about half way back from where they stood on November 4, when Obama was elected, and where they were a month ago. Still, my FOX INDEX [chart], which measures the distance to a healthy market (12,000 Dow, 1,300 S&P, 2,500 NASDAQ), is at -4,201, a full 62% down from healthy toward its October 2002 bottom.

So the market remains bad, if hopeful Obama’s big spending will help.