Despite dire predictions from many analysts and much of the media, Americans actually went shopping this weekend.   In fact, we went shopping over the past three days more than we did as a nation last year.   Remarkable considering last “Black Friday” weekend we had (at least on the surface) a much better economy.

Here is the headline for this weekend according to the National Retail Federation:

Though the holiday season is far from over, retailers across the country are breathing a collective sigh of relief after shoppers headed to stores and websites in droves over the weekend. According to the National Retail Federation’s 2008 Black Friday Weekend survey, conducted by BIGresearch, more than 172 million shoppers visited stores and websites over Black Friday weekend, up from 147 million shoppers last year.*

Shoppers spent an average of $372.57 this weekend*, up 7.2 percent over last year’s $347.55. Total spending reached an estimated $41.0 billion.

So not only did we not drop off a retail cliff, sales overall actually rose from last year’s totals.

I’ve been saying on the program for the past week that when you look at long-term retail sales charts, there are rarely times that sales fall overall and for very long.  Only in small periods (74/75 and 79/80) have retail sales taken absolute drops for any significant period of time.

It would be dangerous to try and predict the remainder of this holiday shopping season.   The Retail Federation notes that while sales were higher, a greater percentage of people (39.4%) also said they were done with their shopping versus the same percent last year (36.4%).    It indicates some daring Black Friday shoppers were merely those looking for uber-discounts who will then close their pocketbooks and spend no more.   That said, history shows Americans are a shopping culture and even with the poor economy it is unwise to bet against the consumer for long.

Is the real estate market in the Northeast dying?   Not according to my weird little study.

In 2005 I began to get concerned about inflated real estate prices and decided to do some rudimentary tracking of the market to try and spot trends.   It merely involved searching the same real estate website for homes in two towns in a set price range.  High tech stuff.   I kept up with the study from April to November of 2005 on my home computer and then transferred it to my work PC later.   That data was lost when I moved to Fox Biz earlier this year.   However, I just happened to come across the original study in some long-forgotten folder and decided to run it again, three years later.   The results are surprising.

Keep in mind that this is quite possibly the world’s least scientific study.   There are numerous variables at play, not the least of which could be that the website of choice, realtor.com, may simply be losing listings to competing websites.    So disclaimer out of the way, here’s the info.

Using realtor.com I ran two searches over a period of months to track listings and prices.   The parameters were the same: 4 bedroom single-family homes priced between $600,000-$900,000 bucks in both Morristown, New Jersey and Stamford, Connecticut.

Here are the number of listings within those parameters from a variety of dates and then today

April 8th, 2005: Stamford, CT had 80 homes for sale with those parameters and Morristown had 30.

June 22nd, 2005: Stamford 102 homes, Morristown 50.

August 2nd, 2005: Stamford 113, Morristown 52

November 29th, 2005: Stamford 84, Morristown 40

and here is the data from today

November 30th, 2008: Stamford 90, Morristown 31.

So 2008 looks a lot like 2005, at least in terms of listings.   The interesting aspect to me what that I expected to find double or triple the number of homes for sale based on the frequently cited “large inventory” of unsold homes or I would’ve expected fewer homes on the higher end of the price range.   The data shows that neither is true.

I’m sure this data would look a lot different in other parts of the country, but at least as far as this little slice of America goes, there hasn’t been a large increase in listings or drop in listing prices from three years ago.

One of the paragraphs in a Wall Street Journal story today says it all:

Rates on 30-year fixed-rate mortgages dropped by roughly half a percentage point to about 5.5%, for borrowers with good credit scores and substantial equity in their homes, say mortgage brokers and lenders.

The Fed’s actions in the mortgage markets should help housing, at least on the refinancing side.   This is also likely a fairly temporary move in interest rates given the volume of the Fed buying in the debt markets.  Of course, homeowners cannot refinance if they owe more than the house is worth, but for those with real equity it may be worth a call to check on rates.

I have completely lost track of the government bailout programs.

Whew.  Okay, I said it and now I finally feel better.

We in this odd industry called the media hate to admit that we don’t know something.   Yet sometimes the most powerful thing for us to say is that we are confused as much as anyone else.   The key for us is to use this curiosity to have guests on the program who do know and understand.  That forces the first step in doing a good interview by asking the most basic, fundamental questions.  Those are the same questions you may have as well.  Bringing Main Street to Wall Street.

So now that I’ve painfully admitted that I’m getting lost in the flurry of government programs and the daily new acronym (today its TALF, by the way, the Term Asset-Backed Securities Loan Facility) here’s what I do know, or at least think I do.

We awoke to new details of the ongoing government spending and rescue plans and the latest incarnation of the TARP.   In the details lie two different programs.

One is the evolution of the existing TARP to go back to what it was originally designed for; the purchase of mortgage securities and debt issued by the GSE’s (Fannie and Freddie).   The Fed said it will purchase up to $100 billion in GSE debt through a series of competitive auctions starting next week. It will also purchase up to $500 billion in mortgage-backed securities backed by GSEs, with the goal of starting that program by the end of the year.

The other program is a second facility (though wrapped in the bodywork of the first) meant to buy the debt of consumer related products, such as auto and student loans.   As the smart folks at the Wall Street Journal wrote:The lending facility, which will be operated by the Federal Reserve, is expected to provide loans to investors who want to buy securities backed by credit cards, auto loans and student loans, the people said. Treasury will contribute between $25 billion to $100 billion to the facility from its $700 billion Troubled Asset Relief Program.

Confused yet?

Luckily there are a variety of people to help us out.   The great staff here at Fox Business who makes sure we have smart guests on who can explain what’s going on.   The WSJ writers who report with clarity and, of course, all of you out there who watch and read Fox Business because you have helped provide us with terrifiic “real” insight and also questions.

There is also the invaluable help of the Wall Street Community.   Despite all the recent negative press, most of those on “the Street” are generally very smart, kind and trustworthy individuals.   One of those is Josh Feinman, Chief Economist at Deutsche Bank Advisors, and thanks to him for help me make sense of the alphabet soup.  

So that said, here’s what I can discern so far about the programs announced in the past few months:

Troubled Asset Relief Program [TARP] - The big daddy.  That $700 billion dollar program getting most of the attention.  Meant to buy mortgage backed securites and other debt backed by housing and Fannie Mae and Freddie Mac.   Half has been authorized, $350 billion is still to be doled out and spent.  

Term Asset-Backed Lending Facility [TALF] - New today.   This program will allow the Federal Reserve to lend money backed by assets of things such as auto and students loans.  Meant to open up bank lending for consumer-related items and get people spending again.

Asset-Backed Money Fund Lending Facility [AMLF] - Targeted directly at helping money market mutual funds stay liquid.  The Fed set up this plan to allow banks to buy weakened commercial paper (short-term company debt) and other products from money funds to make sure more funds don’t “break the buck” and cause a run on the banks and money funds.

Term Securities Lending Facility [TSLF] - Started in March.   This actually allows the Fed to swap bad mortgage and other debt on banks’ books rather than merely lend using those assets as collateral.    A trade, not a loan.

Special Lending Facilities [SLFs] - The Fed set up in March to loan money to JPMorgan to help buy Bear Stearns.  Also used to back AIG’s balance sheet to avoid total collapse.

Primary Dealer Credit Facility [PDCF] - Extends the Fed discount window borrowing facility to non-bank primary dealers.   Not used much.

While that’s a brief and obviously truncated list of the programs, hopefully it’s a decent primer for the plethora of plans and programs announced by the American government in 2008.   There will be no quiz.

Note to reader: if you don’t want to hear more lousy housing data scroll to the bottom of this post for a little bit of good news.   Other brave souls, read on. 

The October existing home sales numbers showed continued weakness in the American housing market.   The National Association of Realtors data indicated that sales of non-new homes fell 3.1% from the September annualized rate.   Sales were down month-over-month for the 34th time in 35 monthly reporting periods.

Here is the analysis from Fox Business Senior Economist Mark Lieberman:

What it means: The details of the existing home sales report were worse than the disappointing headline number in that the inventory of unsold homes fell at a much slower rate than the prior two months and the months’ supply of homes for sale rose. That foreclosures influenced the national sales data was clear from the price declines with prices falling most sharply in the West where foreclosures appear to be concentrated according to data from RealtyTrac. The National Association of Realtors itself estimated 45% of the sales were homes in foreclosure. The rapid price declines could actually stall sales as buyers hold out for even lower prices and sellers dig in their heels. Buyers are generally reluctant to buy into a falling market. Home sales will continue to be a balancing act between buyer and seller. Compounding the sales stall are mortgage lenders who, according to the most recent Federal Reserve Senior Loan Officers Survey continue to tighten lending standards.  Existing home sales peaked in mid-2005 and had fallen steadily for about two years before flattening. The inventory of unsold homes remains high by historic standards pressuring both new construction and home prices.

I highlighted the foreclosure sales aspect because that’s where the biggest problem lies when it comes to prices.   The median home price was $183,300 in October, down 11.3% from $206,700 in October 2007.  The price was the lowest since $183,200 in March 2004, and the 11.3% drop was the largest since records began in 1968.. The median price in September this year was $191,400.

As bad as that seems, the actual situation may be even worse for prices.   That’s because the existing home sales data above comes from the National Association of Realtors.  That group only reports sales done through its authorized realtors and omits any bank-to-consumer or foreclosure sales through auctions.   

But let’s end by trying to find a piece of good news in this nasty data: even though sales are falling, we are still on pace to sell nearly 5 million previously owned homes this year.   Yes, that’s well down from the 7 million or so we sold in 2006 but it’s still not zero.    On my street in New Jersey alone this summer two houses sold and at a price I consider solid.   Call me a pollyanna, but it’s the same point I made from the L.A. auto show last week about car sales.  Yes, sales of cars are down big, but we should still sell around 12 million cars and trucks this year.   That’s 12 million, not 12 thousand or 12 hundred.  

Fascinating - and somewhat sad - story on Bloomberg.com today.   My former colleague Mark Pittman has done the math on government bailout pledges so far.    How does $7.4 trillion dollars sound?  That’s more than half the total output of the entire country and comes to more than $24,000 for every man, woman and child in this country.

Here’s his conclusion:

The money that’s been pledged is equivalent to $24,000 for every man, woman and child in the country. It’s nine times what the U.S. has spent so far on wars in Iraq and Afghanistan, according to Congressional Budget Office figures. It could pay off more than half the country’s mortgages.

Read the whole article here.

Tomorrow I will be live at the Los Angeles Auto Show.

We have a live interview with the CEO of Nissan at 7:45am PT / 10:45am ET followed by interviews with auto execs from Audi, Volkswagen, Ferrari and more.   We should be showing you the new Chevrolet Volt, the electric car that GM has big hopes for.

In addition to discussing the state of the auto industry with the executives we are going to have a little fun (don’t we all need it?) and show you some of the coolest cars and concepts around.   Be sure to tune in on Fox Business all day long.

A bit of sad irony though that while we sit down with Nissan’s Carlos Ghosn, his counterparts from the American automakers are in Washington asking for government money.

Economic anecdote: Newark airport was only mildly busy on flight out to California today.    Fewest people I’ve seen in security line in a long time.

The U.S. auto industry (via GM) is going straight to the people in the form of a new video on YouTube.   It’s designed to lay out a case for a government-sponsored cash infusion.    Conclusions are in the eye of the beholder, but there are two main takeways in my mind:

1. The extent of the health care/benefits/pension problem is greater than previously thought.   Together GM, Ford and Chrysler employ 239,000 people yet as the video states around 2 million people rely on these companies for health care and other benefits, a nearly 10:1 ratio.

2. The debate over whether trickle down economics is dead should be given a gravestone after watching this video.   The automakers make the case that millions of Americans would be impacted by their failure, even those only indirectly affiliated with the auto industry.    The argument is that if one or all of the “Big 3″ go down, cars won’t be sold and everyone in the chain (builders, sellers, distributors, mechanics, etc) would be injured economically.   The negative impact trickles down.   The inverse then must be at least partly true.   Benefit costs aren’t the only reason the U.S. automakers got into this precarious position.  It is also slowing sales of large and profitable SUVs.   If sales didn’t drop off a cliff as gas prices rose the financial condition of GM, Ford and Chrysler would be less weak.   Suddenly the buyer of that $45,000 GMC Yukon looks very important.    Many of the same organizations who shouted that trickle-down doesn’t work are now using a “trickle-up” theory of defense.

The New York Times cover story today is about how some states are facing big budget deficits and are looking at a variety of ways to cut costs and fill gaps in spending.  Those include reducing social services, freezing hiring and, of course, raising taxes.   Michigan is even discussing salting roads less in the winter, a potentially dangerous misstep.

As states try to figure out how to cut costs and services to current taxpayers, it seems no one is talking about is rolling back the retirement age for government workers to help ease at least one part of the budget problem: massive pension burdens.

California, for example, has the nation’s biggest state economy and also the biggest problems.  The Golden State is facing a nearly $15 billion dollar budget gap and is desperately trying to figure out how to close that, likely through a combination of cost cuts and increased taxes and borrowing.  CalPERS, America’s biggest pension fund, has nearly 500,000 retiree members and 1.1 million more active and inactive members.   CalSTRS, the teachers fund, had 812,784 total members and benefit recipients as of June 30, 2007.   That’s about 2 million active and inactive members between the two organizations in a state who’s 2006 population was just over 36 million.

Pensions aren’t the only problem, but they are a big part of them.  The Sacramento Bee, citing a state analysts’ office, reported back in 2004 that California’s pension obligation will nearly triple in 2009-2010 to $3.3 billion, up from $1.2 billion in fiscal 2002-2003.    At the same time, The Heartland Institute, the average retirement age of a California state worker was 59 years old in 2004.   That’s the average, meaning many workers are retiring at an even earlier age.

The problem also exists on the national level.   According to Federal Computer Week, the average retirement age of a federal government worker was 58.7.   Again, many workers therefore are leaving their jobs and collecting benefits in the early and mid-50s.

Americans are living longer than ever.    The average lifespan in this country is around 80 for women, 77 for men.   Assuming government workers live as long as the general population, retirement in the mid 50’s could end up meaning their retirement is funded for 30 or more years.   It’s entirely possible many government workers will be living off pensions more years than they were employed and contributed to those pensions.

There are other issues as well.   In that 2004 Sacramento Bee report, the paper also highlights the problem of “pension spiking.”   As most pensions are based on the highest level of pay achieved, many workers take a promotion, increase their salary and then promptly retire.   That increases the level of their pension, even if they simply took the new job for a few months.    Compounding the problem is that the more workers retire, the more training is needed to fill those slots.   As state employees move from job to job to help push their pensions higher, more spending is needed to hire and train the new workers.   The Bee reports this “pension spiking” and subsequent spending costs the state an extra $100 million per year.

The irony is that much of the news around GM, Ford and Chrysler involves their huge defined benefit obligations.   Much of the debate around whether to put more government money into these companies tends to come back to the issue of pension and health care payments to those companies millions of retirees.   Private workers may end up working longer to balance out the good news that they are living longer.   Yet there is virtually no discussion of this with regard to government and public sector workers.   I imagine that is because government workers tend to be the ones who vote on their own retirement ages.

Living longer is a good thing.  I hope to be piloting a Sopwith Camel at 90.   But living longer is an even better thing when it’s fully funded and the huge financial burden doesn’t drop on the current crop of taxpayers.  Government needs to learn this before it lectures private sector companies on their own mismanagement.

This press release just crossed.   Given stock market decline this year the drop in pension assets may not be a surprise, but the magnitude of the drop is.   This should only accentuate the funding issues at pension funds both in the private and public sectors.

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One-hundred largest corporate pensions lose $59 billion in funding

SEATTLE Nov. 17 /PRNewswire/ –Milliman, Inc., one of the premier global consulting and actuarial firms, today released the latest update to the Milliman 100 Pension Funding Index, which consists of 100 of the nation’s largest defined benefit pension plans. In October, pensions faced a record asset value loss — more than $120 billion — and after adjustment for liability gains, surrendered a total of $59 billion, dropping pension funding to 92.7%, a 12-percentage-point decline from the funded ratio at the beginning of the year.