Saturday, May 20, 2017

Weekly Indicators for May 15 - 19 at

 - by New Deal democrat

My Weekly Indicator post is up at

The one noteworthy change was in the yield curve.

Friday, May 19, 2017

On the economy, breathe easy: it's still on autopilot

 - by New Deal democrat

While there has been some nearly nuclear powered political drama in the last two weeks (and I supported Bernie Sanders last year, so that should tell you everything you need to know about my political opinions about that), the opposite is true about the economy. It remains on no-drama autopilot.  Absolutely nothing has happened to change the trajectory it has been on since a year ago.

In that regard, let me remind you that for a few months the Doomers were trumpeting the differences between the "soft data" like confidence surveys and the diffusions indeses of the regional Feds and the ISM, vs. the "hard data" of sales, income, and more than anything else industrial production.

Well, last month the various components of industrial production all moved in lockstep for once.  Here's manufacturing:

That's a very nice uptick!  And here's mining and utilities:

Mining continues its rebound, and for once utilities weren't hugely volatile.

And here's real personal income:

Steady as she goes there.

And here's real retail sales:

Consumers continue to increase spending.

About the only stall in the "hard data" is in the broader total business sales:

Manufacturers' and wholesalers' more volatile  sales (a surge, then a stall)  are the big culprits here:

Certainly not nirvana given continued subdued wage growth as well, but by no means a fragile flower on the verge of implosion.

So for now, breathe easy about the economy. It remains on autopilot, set to "steady as she goes."

Thursday, May 18, 2017

Worth repeating: real median lifetime income has barely budged since 1958

 - by New Deal democrat

The Brookings Institution studied total real earnings over workers' prime employment ages from 25 to 55. making use of the most comprehensive measure available: Social Security payments based on payroll data from 1957 to 2013.

I'll cut right to the chase.  Here's the conclusion:
Adjusting for inflation, the median male worker born in 1958 earned just 1 percent more during his career compared with the median man born 27 years earlier, in 1932.

I am reminded of a line from Billy Joel's song, "Allentown":
Every child had a pretty good shot,
to get at least as far as their old man got.

 This is the most damning evidence I've seen yet that the American Dream has been dying for over a generation now.  And people wonder why the electorate is grasping at straws, hoping for somebody to deliver real economic change.

Wednesday, May 17, 2017

Housing permits and starts: hint of an autumn chill in the air?

 - by New Deal democrat

Yesterday morning's report on April housing permits and starts disappointed.  Does the report have wider significance?

This post is up at

Tuesday, May 16, 2017

Is the "rental affordability crisis" abating?

 - by New Deal democrat

Three years ago HUD warned of "the worst rental affordability crisis ever," citing statistics that
About half of renters spend more than 30 percent of their income on rent, up from 18 percent a decade ago, according to newly released research by Harvard’s Joint Center for Housing Studies. Twenty-seven  percent of renters are paying more than half of their income on rent. 
This is a serious real-world issue. I have been tracking rental vacancies, construction, and rents ever since.  The Q1 2017 report on vacancies and rents was released several weeks ago, so let's take an updated look.

The bottom line is that rent increases have stopped in the last year, and with increased wages, the effect is that rent has become a little more affordable.  Median asking rent was unchanged at $864 in the first quarter of 2017, and is actually down $6 from $870 YoY, a decrease of -0.75%. Median asking rent has not made a new high in a year, as you can see in the below graph: 

Here is an updated look at real. inflation adjusted median asking rents, which similarly show that after setting an all-time record in Q1 2016, rent pressures on household budgets have abated just a bit:

Year Median
Asking Rent
Usual weekly
Rent as %
of earnings

2004 59962995
2013 73477894
2014  76279196
2016  H1859826104
2016 Q3842835101
2016 Q4864843102
2017 Q1 864865100

While vacancies remain tight, the vacancy rate appears to have bottomed over the last two years, so while there is still stress, the level of stress is decreasing a little:

It is worthwhile to note that the CPI for owner's equivalent rent, the major component of inflation, remains near the highest levels in a decade, although it has backed off a little in recent months: 

 There are two other median measures in addition to median asking rent from the HVS:   the American Community Survey and the Consumer Expenditure Survey.  Unfortunately both are only current through 2015.  The below table shows their YoY increases, compared with median asking rent:

SURVEY: ACS        CES      HVS
2009 --------  (817)    -------     ------  (708)
2010  +2.9%  (841)   +1.4%   +2.6% (698)
2011  +3.6% (871)    +4.4%   -0.6%  (694)
2012  +2.1% (889)    +5.2%  +3.3% (717)
2013. +1.7% (904)    +4.3%  +2.4% (734)
2014  +1.8% (920)    +9.2%  +3.8% (762) 
2015  +0.9% (928)    +4.3%* +6.7% (813)
*June 2014-June 2015 all shelter.

Finally , HUD recently premiered a Rental Affordability Index,, using the ACS data. Similar to my chart above, it compares median renter income with median asking rent. Please note, however, that this has only been updated through Q4 of last year: 

Like the median household income data, this shows renters' income bottoming out in 2011-12, and rising since relative to rents as calculated by the ACS.

That gives us the "renatl affordability index" shown below:

I'm not sold on HUD's method, mainly because it relies upon annual data released with a lag. In other words, the entire last year plus is calculated via extrapolation.  I suspect we could get much more timely estimates using Sentier's monthly median household income series, compared with the monthly rental index calculated by Zumper.

But regardless of which method we use, while it continues to appear that apartment rents as a share of renter income are quite high, the crunch has prbably passed peak, and the "rental affordability crisis" appears to be abating at least a little.