Housing Starts-GDP

It was pretty lonely forecasting those kinds of GDP numbers several months ago!

While the 8% budget deficit keeps it all muddling through at modest levels of growth, it’s still a far cry from being ‘acceptable’ in my book, as it’s just barely enough to reduce the output gap.

And letting FICA go up at year end or somehow paying for continuing the current level could trim quite a bit of Q1 aggregate demand.

Karim writes:

Even though the 9.3% rise in starts was led by a 25% gain in the volatile multi-family component, this still represents ‘news’ for GDP forecasts as most (including the Fed) did not assume any contribution to growth from this sector.

Some Q4 GDP estimates starting to move from 3.5% to 4%, and Q1 also now looks to be in the 3.5% area (assuming payroll tax cut is extended).

Although still likely, FOMC may have a lively debate on extending ‘conditional commitment’ beyond mid-2013.

This entry was posted in Deficit, GDP, Government Spending, Housing. Bookmark the permalink.

3 Responses to Housing Starts-GDP

  1. nystockguru says:

    The NAHB data released monday is a solid recovery from the month prior. It seems to me that NAHB numbers are similiar to manufacturing numbers as they fluctuate significantly month to month but are a great indicator of consumer confidence in the economy. I would imagine they are key components in the University of Michigan Consumer Confidence Survey as people typically make large purchases (i.e. house, car) when they feel good about the future of the economy.

    NYSTOCKGURU’s proposal to have HUD keep an eye on Special Warranty Deeds and create a federal database of who owns mortgages and deeds may really help in restoring confidence in American real estate as an investment, a win-win for banks, builders, investors and a loss for mortgage fraudsters. Lets hope Andrew Cuomo, Gov-NY will lead the way in pushing for solid title work on a government level.

    Housing starts is one thing that the financial media cannot talk-up; only confidence that economic growth will continue and confidence in the system in place in terms of protecting investors and owners can. I heard some news stories about HUD doing some investigating on a local level that resulted in some resigninations by some people who where in charge of insuring that deeds are properly filed. This is encouraging because if people in positions charged with this job are resigning it may be an indication that there is wrongdoing of sorts or the computer systems that hold deed information is vulnerable. While I realize that there may be multiple owners of certain properties typically large commerical real estate, for residential real estate typically there is only one owner – its amazing to see the CDO, MBS, mess being cleaned up by insuring records are recorded and databased in on multiple levels. Expanding a federal HUD database beyond just low income properties should really help in restoring faith in real estate.

    On another note great to see Congress considering a 2 month payroll tax holiday. I still have not heard if there are any strings attached but it seems to be getting through to Congress that taxes are a way to regulate the money supply rather than fund budgets!

    Seems the old adage that ‘ideas have consequences’ still applies!


  2. roger erickson says:

    Policy variance still looms like a very dark cloud.

    Romney: US could face ‘financial crisis’ like Greece, Italy if Obama is reelected

    someone just shoot me now; depressing as it is to resign ourselves to 4 more years of Obama, it could actually get worse. And, it probably will, since Obama seems bent on pleasing any critic.


    Hannah Reply:

    @roger erickson, One of the constants of Republican electoral strategy is to depress the opposition. Low voter turnout is not a happenstance. It’s a 24/7/365 effort by pollsters and propagandists. If universal suffrage can’t be reversed, the electorate has to be thinned by other means.


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