Thursday, April 28, 2011
Gaga over the Royal Wedding!
Although few outwardly admit it (minus the woman who made the news for quitting her job to attend the royal nuptials), millions of us are fascinated by the royal wedding. Maybe this woman had the right idea. Maybe we should consider not only quitting our jobs to go, but also sell our homes and move there. Why not move there? After all, they’ve got the royalty and they still knight people. Who wouldn’t want to be knighted?
Then it’s settled, we should all sell our houses and move to the UK. Figures released today show pending home sales jumped 5.1% last month, a good sign in the market, thanks to “increased affordability.” What are our homes worth these days anyway? According a widely used housing price indicator, called the “Case-Shiller Index,” average home prices decreased 2.6% in February over last year, decreasing at a faster annual pace than in January. This is on top of the massive home devaluations that have yet to recover since prices began to drop in 2007. Hmmm. On second thought, maybe we should just go for a vacation. Really, the food and weather aren’t that great anyway. Plus, who doesn’t like to travel?
This is perfect. I think we should export ourselves there as tourists and be done with it. Exports, in the traditional sense of sending goods and services to other countries, are great – they encourage us to produce what we’re good at, which allows us to use our resources better, adding more wealth and jobs to our economy while other countries foot the bill. That translates into more money to go around for everyone – a higher quality of living. Tourism is a sizable share of our exports too, about 5% (25% of services exports). Plus, given the export statistics released today we could use a boost in exports. Exports only grew by 4.9% so far this year compared to 11.4% at this time last year. Even with this growth, we as a country continue to sell less stuff abroad than we buy from abroad, landing us with a debt (called a “trade deficit”). This type of debt isn’t ideal for boosting economic growth, which is why you may recall hearing that President Obama’s goal is to double exports by 2015. So every export helps!
Okay, that’s not quite how exports work. We have to provide something to someone abroad and someone abroad has to pay in order for it to count, not the other way around. Traveling to the U.K is actually a British export and a U.S. import. The only way our tourism exports could increase from the Royal Wedding would be if the wedding moved to the U.S. and we convinced the British to come here. But something tells me this is not an option. We can let this slide this time. God Save the Queen!
(Commerce Dept., National Association of Realtors, S&P Case-Shiller HPI)