By MAREK FUCHS at Marketwatch
If you think Elvis met an undignified end by dying on a toilet, wait until you see what happens to the Hamptons. Housing prices are finally falling, which signals doom for the entire economy, at least according to a chunk of the media, who are flapping their alarmist gums as we speak.
We could waste 100 years here speaking about how often the media jump to dramatic conclusions. But before dispelling the notion that as Further Lane goes, so goes America — let’s hold the thought in our palms for a moment.
After all, where else are we going to currently look for direction? Good luck parsing out larger meaning from this quarter’s earnings. Apple AAPL, +0.19% Caterpillar CAT, -0.13% and Microsoft MSFT, -0.37% disappointed big time, but Starbucks SBUX, +1.29% and General Motors GM, -1.40% did great, and even Amazon AMZN, +0.06% which has traditionally been what can politely be termed profitability challenged, made money.
In the end, try putting all those contradictory earnings into your spreadsheet and smoke it. You’ll die of the coughs.
Which brings us back to the sandy playground of all those Wall Street, media and entertainment tools.
See: This luxury indicator points to a stellar year on Wall Street
In the second quarter of 2015, the total number of sales in the Hamptons — and median sale price — dropped. As in: off the lip of a cliff. Nearly 600 transactions were recorded, a 16% decline; moreover, the median sales price fell to $849,000 in the quarter, a 7% tumble, all according to the real-estate agency Douglas Elliman and Miller Samuel Inc., an appraisal firm.
As this was happening to the rich and beautiful (or, at least, surgically enhanced), the rest of us were laced with uncertainty, too. July’s Consumer Confidence figure did curdle, dropping steeply to 86.9 from June’s 96.1 and, more problematically, expectations of 95.
Maintaining a decent level of consumer confidence always involves a bit of devil’s magic. Besides holding interest rates below ground and heedlessly printing money, the government can’t do much to help. Consumer confidence is, to some degree, psychological.
So is Further Lane a leading indicator?
No. At least not right now. Disappointment in the Hamptons and the real world did seem to pace each other a bit.
But here’s the factor to watch: In a country obsessed by celebrity and real-estate pornography, the Hamptons may, going forward, hold outsized influence over psychic notions of our collective economic health. Traders and media bigwigs love the place. In fact, many work from there over the summer, adding to its overwrought influence. Never forget: Once notions of an economic decline take hold, the story will largely be told from Amagansett.
We are not, to be certain, there yet. One lame quarter (and it’s only been one) does not a recession make. That’ll take two. You have to, also, beware of a certain media bias. The media are not biased toward the positive or negative. In large measure, they are only biased toward having a new story line. Considering that housing at the higher end and, indeed, the economy at large have been bouncing along nicely, recession (a.k.a., “The High Times Are Over”) is a fresh, new story line.
Nothing is better, at least to journalists, than having a fresh story. As a result, they are often too quick to tell it.
Considering, though, the dicey underpinnings of the economy (see: those underground interest rates and that heedlessly printed money), I might keep a particular eye on those bloated bodies and egos along Long Island’s depreciating South Shore.