Thursday, November 27, 2014
- by New Deal democrat
Best wishes for a very happy Thanksgiving.
Here is a little wonky economic thing we can be thankful for. Since the end of WW2, Typically real GDP growth (blue) outstrips job growth (red) by about 2% on an annual basis:
But in this expansion, GDP growth has only exceeded job growth by about 0.5%.
If the usual relationship held in this expansion, we would only be adding about 50,000 jobs a month instead of 200,000 jobs a month. We would have added 1,800,000 fewer jobs in each of the last 3 years than we actually have. That is something to be thankful for.
Wednesday, November 26, 2014
- by New Deal democrat
A slew of housing data for September and October was reported yesterday and this morning. I'll try to have a long, more involved piece either on Friday or Monday, but in the meantime let me give you a few comments.
To begin with, let me reiterate that I pay so much attention to this market because it is the single most leading sector of the economy.
When interest rates increased by about 1.5% in mid-2013, I forecast that the housing market would stop growing and would even turn down this year. That it did, making a trough at about the end of last winter. Since then it turned up, but only at a very low rate. Generally multi-unit properties are being construted at a slightly faster rate than single family homes, which have stagnated. Meanwhile prices generally have continued to appreciate, although there are signs that these too may actually have turned down earlier this year before starting to appreciate again.
The latest data continues that trend. Last week we already found out that while the more volatile housing starts number was deemed slighly disappointing, housing permits (which tend to be about a month ahead of starts) made a new post-recession high. Today single family home sales were reported equal to their post recession high, made a little more than a year ago. For the last few months they have been generally slightly positive YoY. The less important existing home sales were positive YoY for the first time in many months yesterday. Pending home sales declined from September, but were also have turned postive YoY.
All of the house price numbers are positive YoY. The Case-Shiller index, however, has failed to make a new seasonally adjusted high since April. It did increase month over month. The median home prices of both new and existing home sales appear to have both re-accelerated after making a trough during the third quarter.
Mortgage rates continue to decline, with 30 year rates under 4% again. This tells me that home sales will continue to improve, and are likely to improve a little more vigorously, in the months ahead. And because housing is such a leading sector, this has made me increasingly optimistic about the economy, jobs, and wages next year.