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MOSLER'S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.

Existing home sales up for July, but down yet again year over year

Posted by WARREN MOSLER on August 22nd, 2014

This was spun as a good number, as it exceeded expectations, but check out the year over year chart below,
where sales have been down vs the same month last year for nearly a year:

The NAR reports: Existing-Home Sales Continue to Climb in July
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 2.4 percent to a seasonally adjusted annual rate of 5.15 million in July from a slight downwardly-revised 5.03 million in June. Sales are at the highest pace of 2014 and have risen four consecutive months, but remain 4.3 percent below the 5.38 million-unit level from last July, which was the peak of 2013. …

Existing Home Sales

Existing home sales in July advanced 2.4 percent to an annualized pace of 5.15 million units, topping expectations for 5.00 million. June rose a revised 2.4 percent to a marginally downwardly revised 5.03 million. July sales were down 4.3 percent on a year-ago basis.

For the latest month, strength was in the single-family component which gained 2.7 percent to 4.55 million annualized. Condos were unchanged at 0.60 million.

Supply on the market actually rose faster than sales-up 3.5 percent in July to 2.37 million units. Months’ supply, however, was steady at 5.5 months.

The median price rose 0.4 percent in July to $222,900 (up 4.9 percent year-ago) while the average price increased 0.2 percent to $268,700 (up 3.7 percent year-ago).

Year over year chart:

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Strange report here, but manufacturing in general doing reasonably well:

Details do not confirm what at the headline level, at 28.0 vs July’s 23.9, is exceptional acceleration this month in the Philly Fed’s manufacturing sector. New orders have slowed very sharply so far this month, to 14.7 vs July’s 34.2, while shipments are at 16.5, likewise well down from another 34.2 in July.

Unfilled orders are contracting and delivery times are improving, again both pointing to slowing activity. Employment growth is down as are price pressures.

Posted in Housing | No Comments »

US jobs rose since ’08 crisis, but pay is 23% less

Posted by WARREN MOSLER on August 21st, 2014

US jobs rose since ’08 crisis, but pay is 23% less: report

Aug 11 (Reuters) — Jobs growth in the U.S. since the 2008 recession has been undermined by lower wages, with workers earning an average 23 percent less than earnings from jobs which were lost, a report by an organization representing U.S. cities said on Monday.

The average annual salary in sectors where jobs were lost – particularly manufacturing and construction – during the 2008-9 financial crisis was $61,637, according to the report by the United States Conference of Mayors (USCM), which represents cities with populations of more than 30,000.

Job gains through the second quarter of 2014 in comparative sectors showed average wages of $47,171, implying $93 billion in lower wage income, the report said.

The report also showed that the majority of metro areas – 73 percent – had households earning salaries of less than $35,000 a year.

The latest monthly employment data from the Labor Department showed that more than 200,000 jobs were created for the sixth straight month in July, but that wages were about flat in the private sector.

American workers, on average, earned $24.45 an hour in July, up only a penny from June. Over the last year, wages have grown just 2 percent, in keeping with where they have been stuck since late 2009.

Posted in Employment | No Comments »

Real Fiscal Responsibility Today Radio and TV Show pilots

Posted by WARREN MOSLER on August 20th, 2014

The Real Fiscal Responsibility Talk Show Pilot Project

This project is for everyone tired of hearing economic commentary from those who got everything wrong. For decades the the doctrine of “Fiscal Responsibility” interpreted as long-term deficit reduction and Government austerity has had a secure place in American politics. The three of us proposing this project believe that this doctrine is the economic equivalent of the medieval notion that patients must be bled to cure them of disease.

The notion that austerity is necessary after running budget deficits caused by economic downturns is false and damaging to economies all over the world. We have opposed targeted deficit reduction and austerity in the blogosphere and in an e-book since 2010. Yet despite our efforts and the efforts of many others who using the Modern Money Theory (MMT) approach to economics, as well as other post-Keynesians, the mythology of austerity still survives, waiting in the wings until the next debt ceiling or budgetary crisis provides an opportunity for austerity partisans to push their nostrums of spending cuts and “Grand Bargains” once again.

We value Real Fiscal Responsibility highly, but that doesn’t lie in targeted deficit reduction, or in spending cuts for their own sake. Instead, it lies in targeting real impacts, real benefits, and real results, and fulfilling the needs of real people. We want to replace the false and damaging austerian accountant’s green eyeshade paradigm of so-called Fiscal Responsibility, evaluated against the arbitrary standards and scare tactics of debt-to-GDP ratios and public debt levels, with the human scale paradigm of Real Fiscal Responsibility, evaluated against the standard of fulfilling public purpose.

We seek funding for a pilot project for a new radio/video series that will present, and advocate for this paradigm change. The project will create six shows that we will then use to get the series picked up by an existing cable network.

Please visit the donation page.

Posted in Deficit, GDP, Government Spending | No Comments »

taking away the punch bowl

Posted by WARREN MOSLER on August 20th, 2014


Posted in Deficit, Government Spending | No Comments »

Architectural index up in July

Posted by WARREN MOSLER on August 20th, 2014

Winter dip then a recovery.

We’ll see if these levels hold.

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Posted in Housing | No Comments »

Mortgage purchase apps

Posted by WARREN MOSLER on August 20th, 2014

Not good- purchase apps now down 11% vs last year.
And cash buyers have been fading as well.
And the size of homes built has leveled off.
And check out what’s happened to the growth of new building permits.

Fortunately, as per the mainstream economists and analysts, bad news is good news, as it means the Fed will be lower for longer to a fault, triggering a credit led expansion…

MBA Purchase Applications

A sizable drop in mortgage rates failed to give a lift to purchase applications which fell 0.4 percent in the August 15 week. The trend remains very weak with the year-on-year rate for the purchase index down 11 percent. Monday’s housing market report cited a rise in serious buyers for new homes, buyers however that are likely to be cash buyers based on mortgage application data.

Applications for conventional mortgages, both for purchases and refinancing, rose in the week but the report notes a 5.9 percent decline in applications for government mortgages that includes an unadjusted 8 percent decline in Department of Veterans Affairs applications. Federal Housing Administration and Rural Housing Service applications also fell.

Total refinancing applications rose 3.0 percent in the week giving a 1.4 percent lift to the composite index. Refinancing applications made up 55 percent of all applications vs 54 percent in the prior week. Rates moved lower with the average for conforming loans ($417,000 or lower) down 6 basis points to 4.29 percent.

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U.S. Home Size Levels Off, for Now at Least

Lawler: Table of Distressed Sales and Cash buyers for Selected Cities in July

By Bill McBride

Economist Tom Lawler sent me the table below of short sales, foreclosures and cash buyers for several selected cities in July.

Comments from CR: Tom Lawler has been sending me this table every month for several years. I think it is very useful for looking at the trend for distressed sales and cash buyers in these areas. I sincerely appreciate Tom sharing this data with us!

On distressed: Total “distressed” share is down in all of these markets, mostly because of a sharp decline in short sales.

Short sales are down in all of these areas.

Foreclosures are down in most of these areas too, although foreclosures are up a little in few areas like Nevada, Sacramento and the Mid-Atlantic.

The All Cash Share (last two columns) is mostly declining year-over-year. As investors pull back, the share of all cash buyers will probably continue to decline.

Posted in Housing | No Comments »

Housing and CPI

Posted by WARREN MOSLER on August 19th, 2014

Reinforces the mainstream narrative of the moment:
The Fed will keep rates low, getting ‘behind the curve’ and causing a run away economy.

My narrative remains that the 0 rate policy is deflationary and also keeps a lid on growth.

The ‘surge’ in total starts, which remain pretty much at the lows of prior recessions (see charts which are not population adjusted), was in multi family, which is ok, but units tend to be smaller and a lot less expensive than single family, and total expense is what counts for GDP/employement/etc. And it all remains a much lower % of GDP than in prior cycles:

Housing Starts

Housing may be making a comeback with the labor market improving and awareness that the Fed is cutting back on mortgage-backed securities-meaning a pending rise in mortgage rates.

Housing starts for July jumped to an annualized pace of 1.093 million units-up from 0.945 million units the prior month. The latest number well topped expectations for 0.963 million units. July was up a sharp 15.7 percent (monthly), after dipping 4.0 percent in June.

Strength was led by the multifamily component which surged 28.9 percent after a 3.1 percent decline in June. But the single-family component showed health with an 8.3 percent rebound after falling 4.4 percent in June.

According to building permits, momentum is building-but largely for the multifamily component. Permits jumped a monthly 8.1 percent to an annualized pace of 1.052 million units. For July, the multifamily component gained 21.5 percent while the single-family component edged up 0.9 percent.

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Consumer Price Index

Posted in Housing, Inflation | No Comments »

Fed policy comment

Posted by WARREN MOSLER on August 18th, 2014

So the theme is ‘the Fed is getting behind the curve’

That is, Yellen keeps rates ‘too low’ causing the economy to overheat.

Complete nonsense, of course, but it drives markets until it doesn’t.

Much like QE.

The 0 rate policy, including QE, remains no way supportive of growth and employment, but instead deflationary and contractionary, as evidenced by the anemic private sector credit expansion, low income growth, and ‘low inflation’. And the gaping output gap…

Posted in Fed, Interest Rates | No Comments »

Housing market index

Posted by WARREN MOSLER on August 18th, 2014

Above expectations on a bounce from ‘cold winter’ lows that still leaves it relatively low, and lower than this time last year.

And note that mortgage finance has flattened out as well.

The regional breakdown is led by the Midwest which surged 13 points to 65 followed by the West which dipped 1 point to 57. Continuing to lag way back is the Northeast, a region already fully developed, with the South, which is by far the largest region for new home sales, down 2 points to a soft 51 which doesn’t point to much strength for the new home sales report. Watch for housing starts tomorrow and the new home sales report next Monday. The Dow is moving to opening highs following today’s report.

Posted in Housing | No Comments »

Bank lending weekly update

Posted by WARREN MOSLER on August 16th, 2014

What was touted as an acceleration of growth seems to have leveled off over the last few weeks, and is looking more like a dip in growth (cold winter?) followed by a recovery that’s leveled off.

More troubling, however, is the late cycle pattern of a slowdown in the growth of lending followed by borrowing to fund cash shortfalls that turns into negative growth, but in this case seems the recent growth is coming from the smaller banks:

At the same time, net interest margins for banks continues to fall:

(August 7 release)

Posted in Banking, Credit | No Comments »

Last tweet of Aaron Swartz before he died

Posted by WARREN MOSLER on August 15th, 2014

Tweet attached
Reads like he’s been promoting ideas from the MMT websites

Aaron Swartz documentary here

Posted in MMT | No Comments »

PMC donation information

Posted by WARREN MOSLER on August 14th, 2014

I am now also emailing my posts directly to my PMC donors at the same time they are emailed for posting on this website.

If you wish to be on the list, please make a donation here.

Posted in Uncategorized | No Comments »

NY Fed: Household Debt decreased

Posted by WARREN MOSLER on August 14th, 2014

So much for a consumer led ‘borrowing to spend’ credit expansion? 6 years of 0 rates from the Fed hasn’t done the trick. Same in Europe. Nor over 20 years of same in Japan.

But these are all exceptions…

NY Fed: Household Debt decreased Slightly in Q2 2014, Delinquency Rates Lowest Since Q3 2007

Posted in Credit | No Comments »

credit chart upgrade

Posted by WARREN MOSLER on August 13th, 2014

Still anemic.

Looks to me there was a ‘dip’ and then ‘recovery’ and a recent return to the prior growth rate?

Doesn’t look like acceleration from this angle?
Just a dip and recovery, leveling off at a lower rate of growth?

And looking at both of these I’m not impressed, sorry!

Posted in Credit | No Comments »

retail sales, mtg purchase apps, global highlights

Posted by WARREN MOSLER on August 13th, 2014

Growth decelerating for 3 consecutive months:

Retail sales disappointed for a second month in a row. Retail sales were flat in July, following a 0.2 percent gain the month before (originally up 0.2 percent). Analysts forecast for a 0.2 percent rise in July.

Motor vehicles slipped 0.2 percent, following a decrease of 0.3 percent in June. Excluding motor vehicles, sales edged up 0.1 percent, following an increase of 0.4 percent in June. Forecasts were for 0.4 percent. Excluding motor vehicles and gasoline, sales nudged up 0.1 percent in July after jumping 0.6 percent the prior month. The median market forecast for July was for 0.3 percent.

While consumer spending was healthy in the second quarter, that does not appear to be the case for the third quarter based on July data.

Mtg purchase apps down for the week and down 10% year over year:

MBA Purchase Applications

Demand for purchase applications remained flat in the August 8 week, down 1.0 percent for the second straight week. Year-on-year, purchase applications are down 10.0 percent. Demand for refinancing is also weak, down 4.0 percent in the week. The declines come despite a dip in mortgage rates where the average 30-year mortgage rate for conforming loans ($417,500 or higher) fell 2 basis points to 4.24 percent.

Home Price Growth Slowdown a Mixed Trend for Economy (WSJ) Single-family housing prices rose 4.4% in the year that ended in the second quarter, the slowest annual pace since 2012, according to a report released Tuesday by National Association of Realtors. The association found that median prices for existing single-family homes grew year-over-year in 122 of 173 metropolitan areas it tracked, while prices declined in 47 metro areas. Only 19 areas showed double-digit year-over-year price increases, a substantial drop from the 37 cities that showed such increases in the first quarter.While the median existing single-family home price between the second quarters of 2013 and 2014 rose 7.3% in the West to $297,400, home prices in the Northeast fell 0.9% to $255,500, the report said.

Japan GDP shrinks sharper than after 1997 tax hike (Nikkei) The Cabinet Office said in a preliminary report Wednesday that real gross domestic product for April-June contracted at an annualized rate of 6.8% from the previous quarter. The decline was steeper than in the same quarter of 1997, after sales tax was raised from 3% to 5%. At that time, the economy shrank 3.5%. Economic and Fiscal Policy Minister Akira Amari was unfazed by the big contraction. “The backlash will ease down the road,” he said at a news conference after the GDP results were announced. He said the economy will return to a mild recovery path after summer. “Production shifts to overseas are well underway,” said Amari, indicating that the export decline this time is a long-term structural trend.

China July property investment slows, sales drop sharply (Reuters) Property investment grew 13.7 percent in the first seven months from a year ago, down from an annual rise of 14.1 percent in the first half. Newly started property construction dropped 12.8 percent in the January to July period from the same time a year ago, though the decline easing from an annual drop of 16.4 percent in the first six months. Meanwhile, property sales dropped 16.3 percent in July in terms of floor space, according to Reuters calculations based on official data. That compared with a 0.2 annual drop in June. The NBS data showed mortgage loans fell 3.7 percent in the first seven months of 2014, unchanged from the first half.

Surprisingly weak China July money data cast doubts on recovery’s durability (Reuters) China’s total social financing (TSF) aggregate fell to 273.1 billion yuan ($44.34 billion) in July, about one seventh of that in June. The People’s Bank of China took the unusual step of issuing a statement immediately after the data, reassuring markets that credit and financing growth was still reasonable and that it had not changed its monetary policy. Non-performing loans have now risen for 11 straight quarters, the central bank’s statement said. Chinese banks made 385.2 billion yuan ($62.53 billion) worth of new yuan loans in July, down sharply from 1.08 trillion yuan in June and well below expectations of 727.5 billion yuan, central bank data showed on Wednesday.–

Overly tight fiscal globally continues to put the squeeze on output and employment.

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Posted in GDP, Housing | No Comments »

Kudlow on year end benefit expiration driving H1 employment gains

Posted by WARREN MOSLER on August 11th, 2014

The question is whether this front loaded 2014 hiring.

If it did, H2 employment gains could be materially lower.

Kudlow: Jobs are the best kind of welfare

“To be sure, there are signs that employment in the country is rising more rapidly these days. The February to July period was the first six-month stretch of consistent employment gains above 200,000 since 1997. And that came without any new programs from the federal government to “create jobs.” Even more surprising, those gains overlapped a quarter in which GDP actually contracted.

So what drove the increase? University of Chicago professor Casey Mulligan put his finger on it: “Major subsidies and regulations intended to help the poor and unemployed . . . reduce incentives for people to work and for businesses to hire.” And guess what happened when federal emergency job assistance ended? Job increases were the best in 17 years.”

Posted in Employment | No Comments »

Consumer credit, wholesale trade, productivity and costs

Posted by WARREN MOSLER on August 8th, 2014

This has been going the wrong way since the post winter April ‘surge’:

Consumer credit rose $17.3 billion in June and was driven once again by the nonrevolving component, which rose $16.3 billion on vehicle financing and also the government’s continued acquisition of student loans from private lenders. The revolving component, which is key for retailers, did rise but not very much, up $0.9 billion following a revised $1.7 billion rise in May that followed a rare surge in this category of $8.8 billion April. Aside from vehicles, consumers remain reluctant to take on new debt.

Growth rate of student loans continues to slow:

Trade numbers resulted in upward Q2 GDP revisions, while today’s inventory report means downward revisions:

Wholesale Trade

Wholesale inventories rose 0.3 percent in June, a modest rise in line with a modest 0.2 percent gain in wholesale sales that leaves the stock-to-sales ratio unchanged at a lean 1.17. Activity has been strong in the auto sector with wholesale sales of autos jumping 2.1 percent, following gains of 1.4 percent and 3.1 percent in the prior two months. The gain in sales made for a 0.3 percent draw in wholesale inventories of autos, one that will have to replenished which is a plus for auto production.

Outside of autos, inventory draws are scarce but do include a major 5.3 percent draw in farm products which follows prior consecutive monthly draws of 4.4 percent and 0.4 percent. How much the draws in farm products will be replenished is uncertain given an 8.1 percent drop in wholesale sales for farm products during the month, not to mention current concern over the Russian embargo of US food products.

Turning back to sales, paper products, professional equipment (including computers), lumber, and metals show strong gains, all matched by what are likely desired builds on the inventory side. Weakness in sales, outside of farm products, includes chemicals, hardware, groceries, and apparel, groups all showing on the inventory side what are likely to be unwanted builds.

Outside of autos, this report on net points to soft growth in the wholesale sector during June. Next inventory data will be the business inventories report next Wednesday.

“Inventories are a key component of gross domestic product changes. The component that goes into the calculation of GDP—wholesale stocks excluding autos—increased 0.4 percent.

A report this week showed stocks of nondurable goods at manufacturers rose far less than the government had assumed in its advance second-quarter gross domestic product estimate published last week.

In that report, the government said inventories contributed 1.66 percentage points to GDP growth, which expanded at a 4.0 percent annual pace.

Wholesale inventories in June were held back by a decline in automobiles and nondurable goods.

Sales at wholesalers rose 0.2 percent after increasing 0.7 percent in May. There were declines in sales of nondurable goods, hardware and apparel.”

Unit labor costs below expectations:

Posted in Credit, GDP | No Comments »

Saudi oil output

Posted by WARREN MOSLER on August 5th, 2014

Still price setter after all these years.

Posted in Oil | No Comments »

wealth gap slowing the economy

Posted by WARREN MOSLER on August 5th, 2014

It’s always about unspent income.

S&P: Wealth gap is slowing US economic growth

Posted in Uncategorized | No Comments »

Recent charts

Posted by WARREN MOSLER on August 4th, 2014

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Notice that the govt deficit and savings rate more pretty much together?

Car sales off of last months pace, but forecasts for this year are for a slower rate of growth than last year:

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No sign of ‘consumer acceleration’ here?

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Manufacturing continues chugging along at it’s usual 4% rate of growth:

PMI Manufacturing Index:

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And Consumer Sentiment continues to bob around at levels that were the pretty much the lows of prior cycles:

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Slipping a bit after the year end surge to beat expiring tax credits?

Bank lending flattening some after growing to fund unsold Q2 inventories?

Q2 could be revised to anything over the next couple of months, seems, as was Q1.

But at least for now the chart is what it is:

The second quarter rebounded more than expected from the adverse weather impacted first quarter. While there were a number of strong components, the rebound was led by inventory growth.

Posted in Credit, Employment, GDP, Housing | No Comments »