Two recent news stories lend new support to my earlier argument that real estate IS the U.S. economy:
Gallery Corp., a Southern California-based chain of 52 mattress stores, has filed for bankruptcy protection with assets of $15 million and debts of $20 million on its books, and Williams-Sonoma, a San Francisco-based nationwide chain of gourmet-cookware stores, has posted a 7% drop in its quarterly net income on a year-to-year comparison basis. Both companies cited weakness in the housing markets as one factor in their results.
It's possible that housing was really just a handy excuse for management missteps at these companies. Yet either way, the news reinforces the perception that what happens in real estate doesn't stay in real estate, but instead spills over into the broader economy. The argument that real estate is an island still doesn't hold water.