Tuesday, March 1, 2011

The Gang Back in Action

Our gang of two traders and two economists was awfully quiet of late. We had a short exchange in relation to last Thursday's home sales figures on Friday:
As you can see in the graph above, on year-on-year basis, there is a sharp drop. And that's how the data was interpreted by the media.

But as the other (the more knowledgeable one) economist commented, these figures look normal after the sharp rise in home sales in 2009, accentuated by the weird second quarter figure. Besides, I agree with him that looking at yearly growth does not make sense in this case. After all, although it impossible to officially test for it, due to lack of data, it is tough to say that there is seasonality in home sales.

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