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"How much of a mirage was the brief housing rebound?\nThe double dip in U.S. house prices is raising fears of another recession. But by one measure housing and consumer spending never bounced back in the first place.\n\n  \nOne view of the zombie housing economy\nThe Chicago Fed\u2019s personal consumption and housing index, which tracks housing starts, building permits, retail sales and personal spending, hasn\u2019t been above zero since December 2006. That&amp;#8217;s\u00A0a 52-month stretch that&amp;#8217;s unparalleled in the 34-year history of the index.\nThe monthly index registers zero whenever activity in those categories grows in line with historical trend. A positive reading shows faster expansion and a negative reading either slower growth or outright contraction.\nBecause the index doesn\u2019t track house prices, a look back at the past five years (see chart, right) shows a steep decline starting in 2007 but no rebound of any note. This year\u2019s readings are above the trough reached in early 2009, but not by much.\nAnd since falling housing prices won\u2019t do much to stimulate either consumer spending or homebuilding, it looks like a good bet that this index is going to stay at low levels for a good long time.\nOnce upon a time housing and consumer spending were tied to the performance of the stock market. But that relationship hasn\u2019t held since the Fed started in 2009 to buy bonds to ease financial conditions, notes Howard Simons of Bianco Research.\nHe attributes the stock market\u2019s rise since the 2008-2009 collapse to what you might call the very limited success of quantitative easing \u2013 fostering a rise in asset prices without an accompanying improvement in the economy. But it stands to reason that can&amp;#8217;t last forever, a thought that investors obviously have been chewing on a bit lately.\nIf the end of Fed bond purchases restores the link between housing activity, personal consumption and stock prices, watch out below &amp;#8212; and then watch out, after a few months of handwringing, for QE3."^^<http://www.w3.org/2001/XMLSchema#string>
<http://fortune.com/2011/06/13/how-the-housing-depression-spells-qe3/>