There were a couple of rays of economic sunshine this morning in reports on existing home sales and leading indicators. Analysts immediately set about trying to dispel any hint of optimism.

Existing home sales for December increased to a seasonally adjusted annual rate of 4.74 million from a 4.45 million pace in November. For the whole year sales fell 13.1% to 4.91 million units. The inventory of existing homes for sale in December fell to 9.3 months from 11.2 months in November. The median price at the end of December was $175,400 down 15.3% for the year.

Not too much should be taken from one month of data. The seasonal adjustments in December are large and the numbers usually are revised. Although the inventory is down, some of the decline may be accounted for by deferred foreclosures as state and federal actions push them into the future.

The Conference Board’s index of leading economic indicators rose by 0.3%. It had fallen by 0.4% in November. The increase was fueled by the Fed’s massive increase in the money supply. The money supply figure is one of the 10 components used to calculate the index. All of the other components were negative or flat causing the Conference Board to completely disregard the December number as a positive signal. In fact, the release of the data was accompanied by a statement saying that an “intense recession” is likely through the spring.

At least I felt good for a minute or two when I first saw the data.

more: here and here