{"id":1553,"date":"2019-06-18T11:59:28","date_gmt":"2019-06-18T15:59:28","guid":{"rendered":"https:\/\/naroffeconomics.com\/?p=1553"},"modified":"2019-06-18T11:59:28","modified_gmt":"2019-06-18T15:59:28","slug":"may-housing-starts-and-permits-3","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=1553","title":{"rendered":"May Housing Starts and Permits"},"content":{"rendered":"\n

KEY DATA:<\/strong> Starts: -0.9%; 1- Family:\n-6.4%; Permits: +0.3%; 1-Family: +3.7%<\/p>\n\n\n\n

IN A\nNUTSHELL:<\/strong>  \u201cHousing continues to wander along, not doing\nmuch better but not weakening a whole lot.\u201d<\/em><\/strong><\/p>\n\n\n\n

WHAT IT\nMEANS:<\/strong>  If the housing sector was the canary in the\nmine, it would not be falling over nor would it be singing away.  It would just be sitting there.  Housing starts faded a touch in May, led by a\nsharp decline in the key single-family segment.<\/em><\/strong>  Multi-family activity was up double-digits,\nbut not enough to stop the bleeding. \nThree of the four regions posted declines, with only the South keeping\nthings from looking really ugly.  On\nthe other hand, permit requests rose a touch. \nSingle-family permit demand increased, but that may have due to an\nunusually low April level.<\/em><\/strong>  The\nMay number was similar to what we saw during the first three months of the\nyear.  Permit requests are still running\nabove actual starts, so there is some room for construction activity to\nimprove.<\/em><\/strong>  The backlog of homes to\nbe built is thinning as the number of homes permitted but not started is\nfalling.  If construction increases, the\nrise should not be that great.<\/em><\/strong><\/p>\n\n\n\n

Supporting the view that housing has likely entered\na stable stage was yesterday\u2019s National Association of Home Builders Housing\nMarket Index report.  The overall index\neased as all three components – present and future conditions and traffic –\nwere down.  <\/em><\/strong>The Northeast and West were\noff sharply, but there was a rise in the Midwest and the South was flat.<\/p>\n\n\n\n

MARKETS AND\nFED POLICY IMPLICATIONS:<\/strong>  As\nthe data for this quarter mount, it appears that growth will be somewhere in\nthe 2% range.<\/em><\/strong>  I have it a little\nlower, but given the wild revisions in the retail sales data, it is hard to\nknow what consumers are thinking.  If the\nhousing numbers are an indirect way of looking at household exuberance, it\nlooks like they are shopping but not dropping. \nAnd that may not be bad.  We have\nhad three consecutive quarters of growth that was above sustainable levels, so\nif we have a fourth one that is pretty much at trend, it would be hard to say\nthe economy is weakening.  There is a big\ndifference between a soft economy and one that is easing back to more realistic\ngrowth rates.<\/em><\/strong>  That seems to be\nhappening.   Whether Jay Powell and his band of scaredy-cats\nsee it that way is another story.  There\nis no reason to change anything right now. \nIndeed, now, more than ever, the term patience makes the most\nsense.  The fundamentals of the economy\nremain good.  It is the overarching\npolitical issues that are so threatening.<\/em><\/strong>  But as long as those threats don\u2019t turn into\nreality, the economy does not need any additional help.  Since we will not know where things are\ngoing for a while, the best thing for the Fed to do is punt, that is, remain\npatient.<\/em><\/strong>  The markets are\nexpecting the Fed to lose that term when the FOMC meeting ends tomorrow and the\nstatement is released.  If the members\ndon\u2019t keep it in, it would be a mistake as they would be taking a big risk that\nactual second quarter growth comes out at or below expectations, not above\nit.  How do you square a message saying a rate\ncut is coming when the economy remains solid? <\/em><\/strong> I don\u2019t know. \nI would argue that if the Fed signals that a cut could happen soon, it\nwill have basically moved to a single mandate which contains neither full\nemployment nor stable inflation, which we have. \nIt would be essentially saying that its purpose is to maximize\nmarkets.  When it comes to turning points,\nand a move to lower rates would represent one, it is the Fed\u2019s job to lead, not\nfollow.  That is what previous Chairs\ndid.  They then followed the markets up\nor down until they decided to signal that enough was enough.<\/em><\/strong>  It would be a terrible change in strategy to\nnot only allow the markets to lead during an easing or a tightening, but also\nto determine when the easing or tightening should stop and when it should be\nreversed.  That would be an abdication of\nthe Fed\u2019s responsibility.<\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA: Starts: -0.9%; 1- Family: -6.4%; Permits: +0.3%; 1-Family: +3.7% IN A NUTSHELL:  \u201cHousing continues to wander along, not doing much better but not weakening a whole lot.\u201d WHAT IT MEANS:  If the housing sector was the canary in the mine, it would not be falling over nor would it be singing away.  It … Continue reading May Housing Starts and Permits<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-1553","post","type-post","status-publish","format-standard","hentry","category-economic-indicators"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1553","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1553"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1553\/revisions"}],"predecessor-version":[{"id":1554,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/1553\/revisions\/1554"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1553"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1553"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1553"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}