Innovest Market Commentary for May
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Baseball season is upon us. Our beloved Colorado Rockies began the 2011 season with the best record in April, only to have the worst record in the majors in May. The Rockies have real potential but continue to struggle with a combination of low offensive production and mediocre pitching. The Rockies are not unlike the U.S. economy, where we see signs of improvement coupled with signs of economic weakness. We continue to cheer on both the U.S. economy and the Rockies, though outcomes for 2011 remain undecided.
We can now officially confirm a double dip in U.S. housing prices, according to Case Shiller data just released. In March, aggregate U.S. home prices fell below their April 2009 lows. Despite the best efforts of the U.S. government to reinvigorate the housing market, widespread weakness is likely to be our reality for at least the next year. The trickle-down effects of weak housing cannot be underestimated. Consumer spending drives 70% of U.S. economic activity. Homeowners who face negative home equity and the threat of unemployment are not spending money.
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