The Sad Future of Housing According to Zillow

Is housing on a ‘sugar high’?–is-housing-on-a-sugar-high
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Editor’s Analysis: The Banks have been paying a lot of money to plant articles around the country and in media generally to give us the impression that the recession is over, they did their job in preventing it, and the housing crisis has turned the corner with prices rising. Housing prices are rising in some places because of a glut of cheap money (see mortgage meltdown 1996-2008); other than that the whole thing is an outright lie. Even their own analysts don’t agree with the articles and statements made on behalf of the megabanks.

You can’t take half the blood out of a person and expect them not to be anemic, weak and dizzy. The megabanks took more than that out of our economic system and parked it around the world out of reach of all but the select few who are members of the club. For the rest of us, earning a living is becoming increasingly difficult, getting approval for a reasonably priced mortgage is difficult unless you go for one of the new deals that are out there at 2.5%, 15 years fixed rate, supposedly. Besides the fact that they are going to steer you into an entirely different loan product in the classic bait and switch, they are restarting the “securitization” scheme that wrecked us in the first place.

Who is making money at 2.5%? How can you even have a budget for advertising much less appear dozens of times per day on TV, radio, magazines and newspapers? The answer to these and other similar questions lies in the fact that on average, the mortgages are going to be at much higher rates than those advertised, the incidence of force-placed insurance on fully insured homes will be increased to become a regular major contributor to income to the megabanks in the form of kickbacks or commissions and simply price gouging, and no doubt someone has come up with a really creative way to make certain the loans, on the whole, go into default decreasing the value of a “portfolio” or “pool” of loans to less than half of the nominal value placed on the note — but increasing the profits from betting against the same mortgages they represented as being underwritten according to industry standards.

The fact is that the Federal Reserve cannot keep rates down indefinitely, and the rush to gold and other currencies shows that the big players who know more than you do are getting ready for a major devaluation of currency in the U.S. The “inflation” that accompanies a devaluation might work to the benefit of the homeowners who owe the old dollars but can pay with the new dollars (if they have any). But increased rates mean higher payments, and higher payments combined with no credit and low wages and low median income spells disaster for the demand side of housing. Simply  put: housing prices are going down again and they are already starting to slip.

The only reason inventories of homes for sale are “low” is because of the shadow inventory of homes set for foreclosure sales, the zombie houses that have been stripped and are worthless and the homeowners who are so far underwater that they can’t make it to the closing table. It is a very unpersuasive recovery. Zillow outlines it chapter and verse.

Working backwards, the reason for all this is simple theft using exotic sounding names of financial instruments that were never funded or used. In the end, the loan was from the investors and the debt was and is between the investors and the homeowners. Everyone else is an intermediary. Those conduits for the loan have no stake in it. They have their agreements for fees but that is about it.

There are only two ways of going on this: (1) do the same thing all over again and kick the can down the road to the next blowout recession or (2) stop kidding ourselves that housing prices are going anywhere but down unless we expose the truth of what happened in these so-called mortgage loans funded with money stolen from investors under the premise that the money would fund a REMIC trust which would then acquire loans and be secured, on record, for their interest. Anyone out there see the trust on any document in any loan closing that didn’t end up in litigation? No?

That’s because the intermediaries were and are asserting ownership stakes in loans that never came out of their pocket, loans for which they have no risk of loss and loans that were acquired on paper by other intermediaries when the debt was at all times material hereto owned by the investor lender. AND THAT is why you must LEAD with the deficiencies in the money trail and NOT with the DOCUMENT trail, which will merely have you running down a rabbit hole dug special for you.

The Future of Home Values – Taking a Closer Look at Price-to-Income Fundamentals

Banks Keep Winning, But Borrowers Are Picking Up the Pace

What’s the Next Step? Consult with Neil Garfield


For assistance with presenting a case for wrongful foreclosure, please call 520-405-1688, customer service, who will put you in touch with an attorney in the states of Florida, California, Ohio, and Nevada. (NOTE: Chapter 11 may be easier than you think).

Editors’ Analysis: Based upon reports coming from around the country, and especially in Florida, Nevada, New York, and other states, it seems that while the tide hasn’t turned, borrowers are finally mounting a meaningful challenge to the improper, illegal and fraudulent practices used at loan originations , assignments and foreclosures. As I have discussed with dozens of attorneys now, the strategies I suggested 6 years ago, once thought of as “fringe” are now becoming mainstream and the banks are feeling the pinch if not the bite of homeowners’ wrath.

The expression I like to use is that “At the end of the day everyone knows everything.” By using DENY and Discover tactics or strategies like that, borrowers are shifting the urden of persuasion onto the would-be foreclosers who in most cases do not have “the goods.” They are not a creditor, they didn’t fund the loan, they didn’t buy the loan and they don’t have any legal authorization to pursue foreclosure, submit a credit bid or otherwise trade in houses that were never subject to a perfected lien, and never owned by them.

It is becoming perfectly clear that something wrong is happening when the foreclosure strategies of the Wall Street puppets results in tens of thousands of homes being abandoned, blighting entire neighborhoods, towns and even cities. The banks are not stupid, although arrogance is not far from stupidity.

In ordinary times in any ordinary recession, the banks would do almost anything to avoid foreclose. They simply don’t have the money or the desire to acquire a portfolio of properties and they certainly don’t want to foreclose where the the end result is that the value of the collateral is diminished BELOW ZERO. And they certainly would not pursue policies that they knew would tank housing prices because it would only decrease the value of the loan and the likelihood of getting repaid for the loans they made.

But these are not ordinary times. Banks DO want price declines, so they can create REITS and other vehicles to pick up cheap properties. They DO want foreclosures even where the value of a blighted neighborhood is not worth the taxes, maintenance and insurance to keep the properties.

The reason is simple: if the loan is a total failure and under applicable state law they are able to create the appearance of a valid foreclosure, then the case is closed. Investors have not questioned the foreclosure process, mostly because they think that the basic problem was in the low underwriting standards which  certainly did contribute to the mortgage meltdown. If you look at most of the mortgages they have fatal flaws which increase the likelihood that the loan will fail — especially with blacks and other minorities who have been deprived of decent education and couldn’t possibly understand the deals they were signing.

Disclosure was required — but never made in terms that the borrowers understood — that the loans were being priced too high for the income of the household, and priced higher that the rates for which the household qualified. Blacks were 3.5x more likelihood to be steered into subprime loans when they qualified for conventional loans. People of Latin decent were treated like trash too being presented with documents that not only went above their education or sophistication in real estate transactions but also used words they never learned in English.

But the real reason I learned in my interviews was unrelated to the defective foreclosures. It goes back to the study made by Katherine Ann Porter when she was at the University of Iowa. Her study of thousands of mortgages and foreclosures came to the inescapable conclusion that at least 40% of all the origination documents were intentionally destroyed or claimed as lost. Other studies have shown the figure to be higher than 65%.

In ordinary times the  promissory note executed by the borrower in a conventional residential loan is a negotiable document supported by consideration from the payee who loaned money to the borrower. These notes were given to a custodian of records whose job was to preserve and protect these papers because they were considered by all accounting standards as CASH EQUIVALENT.

So on the balance sheet of the lender the cash was added to cash equivalents as total liquidity of the lender or bank. [What you are looking for on the balance sheet of the “lenders” are “loans receivable” and corresponding entry on the liability side of a reserve for bad debt. You won’t find it in the “new mortgages” because they never had the real stake or risk of loss on that loan and therefore was excluded entirely from the balance sheet or placed in a category in loans held for sale along with a footnote or entry that zeroed out the asset of loans for sale because they were committed to third parties who had table funded the loan contrary to the express rules of TILA and Reg Z which state that the loans are presumptively predatory loans if the pattern of lending was  table funded loans.] See My workbooks on

The notes were considered liquid because there was always a secondary market in which to sell the notes and mortgages. And there, the proper chain of authorized signatures, resolutions, and endorsements was carefully followed, same as they would require from any borrower claiming an asset as proof of their credit-worthiness.

So why would any bank or any reasonable person intentionally destroy the original documents that constituted by definition the origination of the loan collateralize by a supposedly perfected lien? In my seminars and workbooks I answer this question with an example: “If you tell someone you have a hundred dollar bill and that they can have it if they buy to from you for $100, but that you will hold onto it because you will make some more money for them by lending it out, then the fraud is complete. And there you have the beginning of a PONZI scheme.

As long as you are paying them as though they had $100 invested, they are happy. But what if you were holding a $10 bill and not a $100 bill. What if they took your word for it that you were holding a $100 bill. AND what if now they want to see the $100 bill? Now you have a problem. You have no $100 bill to show them. You never did. For a while you could take incoming investor money and then show the original investor the money but when investors stop buying new deals, then you don’t have the $100 bills to show everyone you dealt with because all you ever had was a $10 bill.

So better to say that you destroyed it under the premise that the digitized copy would suffice or lost it because of the complexity of the securitization process than to admit that you never had it to begin with. If you admit it, you go to jail and you are ordered to pay restitution, your assets seized and marshaled to return as much money as possible to the victims of the PONZI scam.

If you don’t admit it, then there is the possibility that after probing why the investors didn’t get their money back, they start discovering how you were using their money, and what you were doing as business plan. The only way to shut that off and make it least likely that investors would ever question whether you had represented the deal correctly at the beginning, to avoid criminal prosecution, is to COMPLETE the FORECLOSURE Process which gives the further appearance that there is an official state government seal of approval on a perfectly illegal foreclosure and probably an economic crime.

See below for the suffering and light and lives lost because of this incredible crime that nobody seems to want to prosecute. A crime, by the way, they has corrupted title records that will haunt us for decades to come.


2.3 million homes about to hit the market as banks grab them up at bargain basement prices


Editor’s Comment: There are few places on Earth where morality is so twisted as you will find on Wall Street, yet we know we need a financial center and bankers motivated by money. The answer is in regulating them like a utility with a few feet added to the leash.

As we stand the banks have inserted themselves into the mortgage process as though they were lenders, traded the loans, sold the loans and bought insurance all payable to themselves. The money came from you and me in our managed funds for retirement and pensions, and the announcement of slashed benefits will come after the election. Obama is likely to want to do something about the problem for retirees on fixed incomes whereas Romney will again say “let it bottom out” like he says about housing, like he said about car manufacturing and dozens of other companies and industries. But Obama is not doing nearly enough so you hardly be surprised with voter disappointment.

Now that they have control over the title to homes they essentially stole, they are about to dump those houses on the market driving prices down further, and enabling them and their preferred clients to buy the homes en masse at the artificially low prices created by the banks themselves. What a world.

If this doesn’t make you want to fight them, what will. Millions of young Americans of all races, creeds, men and women have lost their lives preserving our liberties and freedom from this type of bullying and for the right to protection of our property and our lives through due process.

They died trying to stop this day. Don’t you owe it to yourself and your grandchildren to stand up and fight, without the risk of loss of life and limb?

2.3 million distressed homes have yet to hit market


Just under 2.3 million U.S. homes made up a “shadow inventory” of distressed properties that are likely to hit the housing market in the future, according Santa Ana-based data giant CoreLogic.

That’s down from July 2011, when the hidden supply of distressed homes that could become a drag on home prices totaled 2.6 million units, according to the report.

As of July, the shadow inventory consisted of 345,000 bank-owned units (dark blue), 900,000 homes in foreclosure (light blue), and 1 million homes that were 90 days or more behind on mortgage payments (red).

CoreLogic’s estimate of shadow inventory has dropped steadily since February.

The report said that decline could be a sign that home prices will rise.

“This is yet another hopeful sign that the housing market is slowly healing,” said CoreLogic President and CEO Anand Nallathambi.

The data firm defines shadow inventory as homes where owners are 90 days or more behind on mortgage payments, homes in some stage of the foreclosure process or bank-owned foreclosures that have yet to be listed for sale.

Details from the July report show:

It would take six months to sell all 2.3 million units of shadow inventory based on July’s sales pace.
Just over 1 million units in the shadow inventory are homes that are 90 days or more late on mortgage payments but are not yet in the foreclosure process.
More than 900,000 units are in some stage of foreclosure.
About 345,000 units have gone back to banks after a foreclosure but aren’t yet on the market.
The estimated value of homes in the shadow inventory was $382 billion in July, down from $397 billion in July 2011.

Predictions of Price Increases Versus Predictions of Values

“Just because the market looks better to you on the money doesn’t mean it has recovered from the corruption of title. You still need a lawyer and you absolutely need to do a title and securitization search or at least a consult with someone who can review the past history of the property. The risk here is that you can start off as a “buyer” and end up as a “loser” when title fails and the title policy doesn’t cover it.” —Neil F Garfield,

Morgan Stanley predicts 9 % growth in prices this year alone and another strong year next year. The projection is preposterous. But the idea is out there and it will have its effect as the housing market scrapes the bottom of the barrel. The more confidence people have that the worst of the housing crisis is over the more they will tend to take another look at buying and that will have its own effect.

Schiller takes this psychological game to a new level in the New York times, suggesting that a crowd mentality was the reason for the boom, the reason for the bust and the reason we will come back out of it. But at least he understands the difference between values which are the fundamentals of housing transactions and prices which are the product of psychological factors. The fact remains that median income, while rising slightly lately, showing the incredible strength of the American economy despite all odds against it, is still largely flat when you take a couple of steps back to look at the whole picture.

Median income is the obvious indicator upon which economists agree to set values for housing and other things consumers buy. The reason is the same as any three year old can understand. If people don’t have the money or the credit, they won’t get it because they can’t.

Is another boom and bust bubble coming our way? Probably. That is because despite the various “restrictions” and regulations, the securitization claims against mortgages are on the rise which means that nobody has the risk that a normal bank would have doing a straight out one on one loan of the bank to a consumer. The loopholes abound where the participants can make pornographic fees on a relatively simple mortgage even if it is conventional with someone who has a high credit rating.

As the credit rating declines and as the rules loosen up a bit, the big money is in higher interest rate loans where the loan interest is higher than the amount sought by investors who are still buying mortgage backed bonds and exotic variations of those instruments and still buying the concept of REMIC trust, despite the fact there is no trust, nobody to trust, and nobody in charge, giving plausible deniability to everyone in the chain of “securitization.”


Underwater homes under 40 and over 55 still in dire straights

Obama response unclear. He keeps saying that the  object here is not to include “undeserving” borrowers who are just trying to get out of a bad deal a deal that went bad or whose eyes were bigger than their pocket book. As long as he keeps saying that he is missing the whole point. This was a Ponzi Scheme and even if the borrowers were convicted felons behind bars they would still be victims of THIS Scheme. ALl the elements are present — identity theft, diversion of funds, false documentation to both sides, fabrication of documents as the lies came under scrutiny, forgeries, surrogate signing, robo-signing, and profits 1000 times the usual profits for processing or originating loans.

None of these profits were disclosed to either the lender-investor nor the homeowner borrower, violating a myriad of mending and contract laws. It doesn’t matter whether the borrower is perceived as deserving relief — they all are if they were fraud victims.

If the average guy on the street knows we have been screwed without all the economic statistics, why won’t Obama at least acknowledge it?

See Vast geography contains underwater homes inviting homeowners to walk away from homes they are willing to pay for

More Lies: Housing Data



“You have to ask yourself the question “WHY?” why would banks reject modifications where borrowers would keep paying and instead foreclose and then abandon the house. Something is going on here.” — Neil F Garfield,

“The real answer is to go to the banks and stop asking for answers and start asking for the money they made while everyone else lost on the deal.” — Neil F Garfield

Editor’s Note: It’s all happening because whenever reporters, officials or investors research the housing market, they are getting data from the very people who don’t want you to know anything. Going to the Banks for mortgage and housing data is no different from asking a convicted felon (let’s say a rapist) for education on sex. You are going to hear what they want to tell you, not the facts.

As the article below points out, Banks and Realtors, as well as others who have a stake in making you believe that the housing market is (a) not that bad and (b) is getting better. Both statements are untrue. The people to ask are the city officials who are dealing with the aftermath of the holocaust caused by Wall Street mortgage manipulations, the county recorders, and the people themselves who live in neighborhoods that have been destroyed by foreclosure because most of the homes are vacant , stripped or the headquarters of the latest gang of thieves or drug dealers.

As pointed out below, the official Bank figures state that there are 5,000 vacant homes in Chicago. In a city that size, one would think that the vacancy is within reason. But the true facts are that more than 100,000 homes are vacant, with probably the same number about to be vacant as the homeowners confront mortgage servicers and banks claiming their homes but not yet doing anything about it.

These are the people who have strategically defaulted, stayed in the home, and then waited or put up a fight, lasting months or even years without payments, thus recovering part of the investment they made when they bought the house or bought the silly loan product that the “lender” pushed on them, knowing that the home would be in foreclosure.

So these people are sitting on homes that at best are worth 50% of the appraised value used when the “loan” was closed (albeit with someone other than the investor-lender). This part of the problem can be easily fixed by principal reductions or corrections to reflect market reality. Businesses do it everyday in Chapter 11 reorganizations. But the Banks bought their way into legislation that prevented bankruptcy judges from stripping residential liens down to their true value — which is the underlying value of the property.

So the only practical alternative is to walk away and let whoever wants to foreclose, go ahead and steal the property with a credit bid that comes from a party who never was a creditor in the financial transaction between the borrower and the lender. It all seems surreal but it is true.

THE RECESSION: Then you have the unemployment problem and the underemployment problem where people who had an income no longer have that income and they are running out of savings, retirement funds and credit to keep making the payments. This (a) obviously presents imminent foreclosures that are not yet on anyone’s books and (b) hides a valuation problem for homes that is sickening if you are accustomed to thinking of this problem as a cyclical problem that will fix itself.

As unemployment and underemployment rises, and wages either stagnate or go down as a result of inflation and a weak economy, median income drops. It is just a mathematical computation: arithmetic. If people don’t have the income to buy or maintain a house they are not going to own one. As the Case-Schiller index clearly shows, proven over 120 years of analysis, home valuations are so closely tied to median income that they can be considered the same thing.

The housing market stinks and it is dropping. City officials are stuck with figuring out how, on shrinking budgets, they are going to deal with so large a number of homes that are vacant with an endless supply of vacant homes in sight. Some cities are bull dozing the homes while others consider using eminent domain to ward off future foreclosures. The real answer is to go to the banks and stop asking for answers and start asking for the money they made while everyone else lost on the deal.

As intermediaries, the banks are supposed to get paid for their service in processing transactions, deposits and loans. We now have the banks entering any transaction they want as a principal without disclosure to either the borrower or the lender, and then, temporarily “owning” the loan, selling it 20-30 times. Having done that and made a fortune, they toss the “loss” over to the investor lender when there is nothing left in the investment. Pensions get slashed, retirement funds get reduced, and median income drops even further.

Very Bad Things Happen When We Depend on the same People Who Caused the Foreclosure Crisis to Track Its Destruction

Alternetnet/ by Sam Jewler, Chris Herwig

See Full article at very-bad-things-happen-when-we-depend-same-people-who-caused-foreclosure-crisis-track

Eurozone Recession in Overdrive

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Editor’s Comment:

France, Italy, Spain All at record lows in GDP

Mish Shedlock nails it in the article below. We are reminded again that where the banks get control of political policy, every avenue will be explored before Governments do the right thing — or the country explodes into chaos and a new Government is born. For those who have studied French history, these reports sound earily like the conditions that preceded the French Revolution and the bloodbath that followed. Rioting is commonplace. And the rioters are not just expressing outrage; they have lost faith in the their government, their currency and their prospects. Japanese seminars abound on how to store money and move to other countries. Malasia looks good to them. 

And here in the United States, the steam keeps building under the lid while the banks, realtors and other groups try to convince us that the recession, and the mortgage crisis that brought it on, is over and will NOW recover. Despite years of such “prosperity is just around the corners’ spinning, and some people still believe it when they hear it, we know from history, including our own, that revolution of one sort or another, doesn’t take a majority of citizens to get involved. In fact, every major revolution in every major country occurred with a small band of “fringe” people leading the way until their sucesses attracted the mainstream people who thought they could ride the storm and survive the aftermath.

Over the next 60 days, long-term unemployment benefits are over in this country. GDP is in for another hit. That was money going into the hands of people who were spending it the moment they received it. The full multiplier effect has been keeping our economy floating and now THAT is going away. 

Home prices are now at their lowest level since 2002 and all responsible analysts tell us that housing prices are going down another 15% and I think they are right. The economies of the world are crashing because the people have no money to spend. Even the employed are underemployed and can’t make enouogh money to pay for housing and other major purchases except on a much lower scale. 

We are in a depression, not a recession and the fact that this Depression is not yet as bad as the Great Depression should not lull us into a false sense that this is just a cycle that will run its course. It isn’t. This is the end of modern commerce unless we do something about it. And the ONLY thing left to do is to provide a mechanism where the middle class is suddenly redeployed with cash in their hands to buy things and cause commerce to renew. Don’t look to China or India either which are experiencing sharp decines in GDP. 

There is only one piece of currency that will restore the middle class . Iceland proved it as have other countries. FORCE BANKS TO REDUCE HOUSEHOLD DEBT. Between the mortgage chicanery and credit cards, government borrowing on terms they didn’t understand, and most banks that were “in the game” without knowing the rules, the money is gone. It isn’t the bank that has been robbed, nor government spending that is ripping the economies of the world apart. It is the banks themselves that siphoned off all our currency and our liquidity, and won’t put it back. They have lost their franchise through greed. It is time to nationalize the banks and then let them operate privately as utilities regulated as though they provide the lifeblood of the world.   

The “anti-regulators” are mere apologists for the new aristoracy that has pulled off a coup d’etat and pulled the wool over the eyes of the media and the public.

Eurozone Retail Sales Crash: Record Declines in France and Italy, Overall Revenues Drop at Near Record Pace

by Mike “Mish” Shedlock

Retail sales in France, Italy, and the eurozone as a whole hit the skids according to Markit. Retail sales in Germany were positive, but barely.

Steepest Decline in French History

Further sharp fall in French retail sales during May

 Key points:

  • Month-on-month decline in sales matches April’s survey-record
  • Steepest year-on-year decline in series history
  • Purchase price inflation eases to near-stagnation

Sales fell on an annual basis at the steepest pace recorded since the inception of the survey in January 2004. Margins continued to be squeezed amid an intense competitive environment, despite purchase price inflation easing to near-stagnation.

The headline Retail PMI® registered 41.4 in May, matching April’s survey-record low. French retailers indicated that actual sales came in well below previously set targets during May. The degree of undershoot was the greatest since February 2010.

Record Declines in Italy

Record year-on-year decrease in Italian retail sales in May

 Key points:

  • High street spending down sharply, albeit at weaker monthly rate
  • Job shedding steepest in series history
  • Discounting and cost inflation reduce profitability


The Italian retail sector remained in contraction during May, with sales again falling sharply in spite of widespread discounting. Cost pressures meanwhile grew from April’s recent low on the back of rising transport costs, thereby adding more pressure to margins. Consequently, firms shed staff at a marked and accelerated rate that was the steepest since data were first compiled in January 2004.

High street spending across Italy contracted sharply on the month during May, albeit at a slightly slower rate than that registered during April. This was signalled by the seasonally adjusted Italian Retail PMI® posting at 35.8, up from 32.8. Sales fell for the fifteenth month straight, and panellists continued to highlight low consumer confidence and falling disposable incomes as the main factors behind the decline.

German Sales Show Slight Growth

German retail sales return to growth in May

 Key points:

  • Retail PMI points to marginal month-on-month rise in sales
  • Like-for-like sales higher than one year earlier
  • Wholesale price inflation eases markedly

The seasonally adjusted Germany Retail PMI rose from 47.4 in April to 50.7 in May, to indicate a marginal increase in sales on a month-on-month basis. That said, the rate of expansion was lower than those seen throughout the first quarter of 2012. Companies that reported a rise in sales since April generally noted that more favourable weather conditions had resulted in higher customer footfall.

Survey respondents indicated that actual sales fell short of initial targets for the second month running in May.

Sharp Drop in Overall Sales, Revenues Decline at Near Record Pace

Eurozone retail sales continue to fall sharply in May

 Key points: 

  • Retail PMI improves to 43.3, but still signals steep monthly drop in sales
  • Near-record annual fall in sales
  • Wholesale price inflation slows sharply

Summary of May findings:

The Eurozone retail sector remained firmly in contraction in May, according to PMI® data from Markit. Sales fell sharply on a month-on-month basis, and revenues compared with a year ago were down at a near-record rate. There were signs of easing pressure on retailer’s purchasing costs, however, as the rate of purchase price inflation slowed sharply to a 19-month low.

This should bury the notion the eurozone recession will be short and shallow.

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