Saturday, May 23, 2015

Weekly Indicators for May 18 - 22 at

- by New Deal democrat

My Weekly Indicator post is up at

The bifurcation between the shallow industrial recession and the resilient domestic economy is, if anything, intensifying.

Wednesday, May 20, 2015

The most important positive data of the year

 - by New Deal democrat

Yesterday's report that housing permits and housing starts both reached post-recession record highs in April was the most important data of the year to date.

Quite simply, it takes the possibility of recession off the table for the rest of this year. I expect employment and income to continue to grow, and real retail sales to make overcome the weakness they have exhibited since last November, and make new highs.  This also suggests positive news as to wages in the coming months.

For the record, here is the graph of permits (blue) and starts (red) for the last 5 years:

As I pointed out 2 months ago when starts fell off a cliff, starts are much more volatile than permits.  As permits also tend to lead starts by a month or two, they are the "go to" number of the two.  I read some Doomish commentary by Mish yesterday, pointing out the volatility of the numbers as an excuse to ignore them.  Funny, I didn't hear that caution two months ago when the data tanked.  Hmmmmmm.....

And the 3 month rolling average of permits is also at a new post-recession high.

I have been pounding the table since the "taper tantrum" of 2 years ago that interest rates drive housing (subject to demographic trends).  But if you don't believe me, how about this graph, which was published yesterday with the explanation "Here’s the inverse of the Fed funds rate versus housing starts:"

That was published by Paul Krugman yesterday, to the point that
houses last a long time and don’t become obsolete (the same is true to some extent for business structures, but in a more limited form). So Fed policy, by moving interest rates, normally exerts its effect mainly through housing.
So, as I occasionally remind you, you've been reading the right blog.

And here is the close-up  of the last few years showing the YoY change in housing permits (blue) vs. the inverse of mortgage rates (red):

While mortgage rates haven't made new lows (thus refinancing remains somnolent), they haven't retreated significantly off recent lows.  I therefore expect improvement in the housing market to continue.

Now if the $US could back off its recent highs, the shallow recession in the industrial part of the economy should also go away.

Tuesday, May 19, 2015

Describing the shallow industrial recession

 - by New Deal democrat

I have a new post up at, describing the shallow industrial recession since November, and why it is not now nor do I expect it to become an economy-wide recession.

Monday, May 18, 2015

John "Dan Rather of the Right" Hinderaker Once Again Shows His Remarkable Lack of Credibility

From Powerline:

Building and maintaining roads, bridges, sewers and so on is a core function of government, second only to national security at the federal level, and law enforcement at the state and local level.

Because of its importance, you'd think the boys at Powerline would have written about this topic.  Yet a google search of his site shows only a page and a half of stories over the last 10-12 years.  And there is no mention of the D+ grade given to the US' infrastructure condition by the American Society of Civil Engineers.  What about the 60 Minutes story on infrastructure?  Complete silence.   Or how about the fact that with interest rates at a record low, the US government could borrow at record low rates, repair infrastructure (after all, it's the second most important function of government) and then hire all those unemployed construction workers laid-off after the housing bubble collapse?  Silence.

Yes, dear readers, Hinderaker is that corrupt, stupid and incompetent.