{"id":261,"date":"2014-07-24T12:16:22","date_gmt":"2014-07-24T16:16:22","guid":{"rendered":"http:\/\/naroffeconomics.com\/?p=261"},"modified":"2014-07-24T12:16:22","modified_gmt":"2014-07-24T16:16:22","slug":"june-new-home-sales-and-weekly-jobless-claims","status":"publish","type":"post","link":"https:\/\/naroffeconomics.com\/?p=261","title":{"rendered":"June New Home Sales and Weekly Jobless Claims"},"content":{"rendered":"

KEY DATA:<\/strong> Sales: down 8.1%; Jobless Claims: 284,000 (down 19,000)<\/p>\n

IN A NUTSHELL:<\/strong>\u00c2\u00a0\u00c2\u00a0\u00e2\u20ac\u0153The labor market may be getting better but wage gains are not and until that happens, families will not be buying new homes at any great pace.\u00e2\u20ac\u009d<\/em><\/strong><\/p>\n

WHAT IT MEANS:<\/strong>\u00c2\u00a0When it comes to economic numbers, today\u00e2\u20ac\u2122s data were the best of times and the worst of times.\u00c2\u00a0 First the good news.\u00c2\u00a0 Jobless claims dropped to their lowest level in over eight years.\u00c2\u00a0 <\/em><\/strong>And when you adjust for the size of the labor force, you have to go back to 1999. \u00c2\u00a0Clearly, the labor market is tightening, but we have to be a little cautious about the July claims numbers.\u00c2\u00a0 The vehicle makers don\u00e2\u20ac\u2122t close plants in the same pattern that they used to <\/em><\/strong>when July was standard changeover to new model time.\u00c2\u00a0 Thus, the seasonal adjustments may be a little out of whack <\/em><\/strong>and it wouldn\u00e2\u20ac\u2122t be surprising if the number gaps upward next week.\u00c2\u00a0 It will still be low, but not as eye-catching as today\u00e2\u20ac\u2122s number.<\/p>\n

While the job market may be getting better, the housing market is not, at least when it comes to new home sales.\u00c2\u00a0 Builders saw demand plummet in June<\/em><\/strong> and the decline was across the entire nation.<\/em><\/strong>\u00c2\u00a0 The largest fall off was in the East, where sales plummeted 20% while the West saw demand decline by just under 2%.\u00c2\u00a0 The supply of homes for sale is continuing to rise <\/em><\/strong>and that growing inventory could lead to improving sales as buyers have more options to choose from.<\/p>\n

MARKETS AND FED POLICY IMPLICATIONS:<\/strong> \u00c2\u00a0While the declining housing sales are troubling, they really didn\u00e2\u20ac\u2122t make a lot of sense.\u00c2\u00a0 It is hard to believe that builder confidence is jumping, as we saw with the jump in the Home Builders\u00e2\u20ac\u2122 index, while sales are falling.<\/em><\/strong>\u00c2\u00a0 So I am a little suspect about these data.\u00c2\u00a0 Meanwhile, the jobs numbers are just getting better and better and for me it is all about the labor market. <\/em><\/strong>\u00c2\u00a0Not to sound too much like the broken record that I am, the missing link in this recovery continues to be solidly growing worker income.<\/em><\/strong>\u00c2\u00a0 We saw this week that in June, earnings were flat again and adjusting for inflation, they declined.\u00c2\u00a0 It is hard to make a commitment to buy a house when you don\u00e2\u20ac\u2122t have increasing funds.\u00c2\u00a0 But that is likely to change.\u00c2\u00a0 The low levels of claims points to another solid jobs report<\/em><\/strong> and we could see the unemployment rate decline to 6% or even lower when the July data are released next Friday.\u00c2\u00a0 Now there are many who simply do not believe that worker compensation will accelerate any time soon.\u00c2\u00a0 But unless the law of supply and demand has been repealed for the labor market, the tightening of conditions will force firms to start bidding for workers.\u00c2\u00a0 There may be resistance to doing that and the appearance of wage pressures may take longer to show up as a result, but it is coming and probably sooner than most think.<\/em><\/strong>\u00c2\u00a0 When household incomes start rising, they will be better able to qualify for mortgages while the resulting increase in confidence will likely also encourage more home purchases.\u00c2\u00a0 The Fed will likely wait to until wages are actually rising before any decision to increase rates is made<\/em><\/strong>.\u00c2\u00a0 The old saying that \u00e2\u20ac\u0153if you wait to see the whites of inflation\u00e2\u20ac\u2122s eyes before tightening you have waited too long<\/em>\u00e2\u20ac\u009d seems to have been discarded by the Yellen Fed.\u00c2\u00a0 As for investors and business owners, they dismiss the warning signs about growing wage pressures at their own peril.<\/p>\n","protected":false},"excerpt":{"rendered":"

KEY DATA: Sales: down 8.1%; Jobless Claims: 284,000 (down 19,000) IN A NUTSHELL:\u00c2\u00a0\u00c2\u00a0\u00e2\u20ac\u0153The labor market may be getting better but wage gains are not and until that happens, families will not be buying new homes at any great pace.\u00e2\u20ac\u009d WHAT IT MEANS:\u00c2\u00a0When it comes to economic numbers, today\u00e2\u20ac\u2122s data were the best of times and … Continue reading June New Home Sales and Weekly Jobless Claims<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,27,24],"tags":[],"class_list":["post-261","post","type-post","status-publish","format-standard","hentry","category-economic-indicators","category-new-home-sales","category-weekly-jobless-claims"],"_links":{"self":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/261","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\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=261"}],"version-history":[{"count":1,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/261\/revisions"}],"predecessor-version":[{"id":262,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=\/wp\/v2\/posts\/261\/revisions\/262"}],"wp:attachment":[{"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=261"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=261"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naroffeconomics.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=261"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}