Economic dissonance

Here's why it's so hard to figure out the state of the economy:

--The guys from Chapman University, just out with their latest economic forecast, expect OC home prices to fall 16.1 percent this year and 9 percent in 2009. Their results come on the same day that the S&P/Case Shiller index showed that April home sales in the L.A. area fell 23 percent from a year earlier - not quite as bad as the drops in Miami, Phoenix and Vegas but close.

--An Auto Club survey shows that two-thirds of Socal members plan to travel at least as much this summer as they did a year ago - despite record-high gas prices. Also, three quarters expect to spend about the same or more on travel (more than half plan to spend more than $1,000 on their next summer trip).

The Auto Club numbers came out just as the Conference Board's consumer confidence survey recorded its worst readings in 16 years. The survey showed that many Americans feared they might lose their jobs or be unable to find work. So what's up with all this? For that we turn to the hands of two economists, courtesy of Real Time Economics:

”Consumer attitudes are nearly as bad as they have ever been. Yet, household spending has continued to advance. Retail sales for May were better than expected and the weekly chain store sales reports suggest that the pace of spending has held up reasonably well in June (despite record high gasoline prices), no doubt reflecting the boost from fiscal stimulus checks. Still, outlays in March and April (before the government funds were distributed) proved surprisingly resilient, perhaps suggesting more fundamental strength than would have been expected given the substantial headwinds that households face.” –Michelle Girard, RBS Greenwich Capital

“Ongoing downward pressure on housing prices and equity markets is operating to pound household net worth lower in the second quarter of 2008 — and that follows right on the heels of a massive $1.7 trillion haircut to household net worth in the first quarter of 2008. Compounding the huge and rapid deterioration of household net worth, there continues to be relatively weak employment market conditions, and persistent upward pressure on crude oil, fuel and gasoline prices… These very low readings for consumer sentiment are generating a distinct impression that there is another heavy shoe to drop with respect to consumer spending momentum in the second half of 2008.” –Brian Bethune, Global Insight

Take your pick.