If you wanted a clear picture of Federal Reserve strategy from the Ben Bernanke testimony to Congress this week, you were disappointed.
Of the three games in town, only one isn’t doomed: the real economy.
It’s the old saw that Washington seems to have down to an art: The road to Hell is paved with good intentions.
Last week, four senators that include Elizabeth Warren (D-Mass.) and John McCain (R-Ariz.) introduced a bill to reinstate the Glass-Steagall Act.
Found in China.
My May report disclosed that despite a 40% increase in budget and approximately $194 million in annual bonuses, the Department of Veteran’s Affairs (VA) backlog of disability claims doubled, and claims outstanding for more than a year skyrocketed by 2000% since 2008. The burgeoning scandal appeared to cause the VA to suspend bonuses. But my […]
“A culture of dangerous greed and excessive risk-taking has taken root in the banking world,” said Senator McCain last week. Senator Warren told Wall Street, where failure has been rewarded with bailouts and record bonuses, that “Banking should be boring.” They were pitching the “21st Century Glass-Steagall Act.” Wall Street must have gotten the willies.
The September WTI futures contract closed at $107.81 (up $1.46 on the day). The September Brent contract (Brent 1st nearby) closed at $108.70 (up 9c), putting the differential at under a dollar per barrel. The Brent-WTI spread has seen a spectacular co…
Summer is in full swing so I’ve got my binoculars out. The season is a great time to go hunting for elusive and not so elusive creatures.
Given yesterday’s poor housing starts report, some economists are raising concerns about the sustainability of the positive momentum in residential construction.
The primary explanation for the latest decline seems to be the slowdown in apartment construction.
NAHB: – “While demand for new homes and apartments has grown considerably over the past year, builders are still being very careful not to get ahead of the market, and today’s report reflects that cautious approach,” said Rick Judson, Chairman of the National Association of Home Builders (NAHB) and a home builder from Charlotte, N.C.
“The large dip in multifamily production in June follows a boost of activity in May, and is consistent with the volatility that has come to characterize that sector as well as the uneven pace of the housing recovery,” noted NAHB Chief Economist David Crowe. “That said, the fact that single-family starts and permits both rose in three out of four regions in June is a positive sign that’s in keeping with our forecast as well as recent surveys in which single-family builders have registered an increasingly positive outlook.” The annualized rate of multifamily production declined 26.2 percent to 245,000 units in June after a 28.2 percent gain in the previous month.
Some have also attributed the slowdown to weather conditions.
There is another issue however that nobody wants to discuss. Anecdotal evidence suggests that the sudden rise in interest rates has spooked some developers who decided to cool things down a bit – at least until there is more certainty around rates and economic growth (we’ve seen glimpses of this earlier).
There is no question that construction will resume on its upward path, if for no other reason than demographics. The US population is growing at the rate of roughly 2.3 million per year and construction rates are just not keeping up.
But even a temporary slowdown in construction (particularly if caused by policy uncertainty) is bad news for the US economic growth, which remains fragile.
WSJ: – The weaker-than-expected housing activity could weigh even further on second-quarter growth estimates, which have already dropped below 1%.
BNP Paribas economists on Wednesday said the drop in June housing starts could shave 0.1 percentage point off their forecast of 0.8% annualized growth of gross domestic product in the second quarter.
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