The two leading indicators of the economy are car sales and new home sales.  We have seen with “Cash for Klunkers” that the government can throw money at a situation and artificially inflate sales for a time.  The government originally approved $1 billion for the program.  But then later approved an additional $2 billion.  This program has been terrible in distributing money to the dealers, but it did increase sales for a time.  However, after the program expired, sales drastically decreased again as the artificial demand collapsed. 

In addition to this program for cars, the government also currently has a program to provide an $8,000.00 tax credit for first time home buyers who purchase a home by November of this year.  After November the program will expire. 

Over the next month or so we will be hearing about the increased sale statistics that have taken place because of this program.  We will hear about how we have turned the corner.  However, in January we have to expect that sales will drastically decrease again once the program ends.

It appears that car and home sales will not improve until late next year.