Global Economic Intersection
Advertisement
  • Home
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
  • Home
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
Global Economic Intersection
No Result
View All Result
Home Uncategorized

Secular Stagnation In Housing Market?

admin by admin
September 6, 2021
in Uncategorized
0
0
SHARES
29
VIEWS
Share on FacebookShare on Twitter

by UPFINA

Article of the Week from UPFINA

In September, the treasury surplus was $82.8 billion which missed estimates for $106 billion. The deficit was $200.3 billion in August. There is usually a surplus in September (it was $119.1 billion last year). The fiscal year 2019 deficit was $984.4 billion which is 26.4% larger than last year. That’s terrible when you consider that the labor market got fuller. With the unemployment rate the lowest since December 1969, the treasury budget should be in great shape, but it isn’t.

house.calculator


Please share this article – Go to very top of page, right hand side, for social media buttons.


Extremely High Fiscal Deficit

The chart below measures the deficit cyclically. Because the deficit is so large this late in the cycle, the current deficit blows away any previous cyclically adjusted deficit since at least 1960.

federal.deficits.1960.2019

Spending has massively expanded this expansion. In theory, there should be a cyclically high percentage of people and businesses paying taxes and a cyclically low percentage of people taking money from the system because they don’t have a job or are in poverty. Total fiscal year receipts were up 4.2% from last year, but outlays were up 8.2%. Individual income tax receipts were up 2% to $1.718 trillion and corporate tax receipts were up 12.3% to $230.2 billion. Defense spending was up 8.8% to $687.6 billion and veterans benefits were up 11.8% to $200 billion. Interest costs on the debt were up $15.7 billion to $375.6 billion. That’s with near record low interest rates.

Imagine how bad the deficit would be with higher rates. We don’t know at what point the deficit becomes an issue, but higher rates would certainly blow a hole in America’s balance sheet. The Democratic candidates are running on spending more money domestically as they are calling for student loans to be eliminated and Medicare for all. Look for the deficit to go up in the next few years no matter which party wins even if the economy avoids a recession.

Good New Home Sales Report

We’ve recently seen some subpar housing reports which was slightly disconcerting given the momentum housing appeared to have and how low rates are. Consumers are extremely confident in their expected real income growth and rates are near their record low. That’s a great combination for the housing market. Specifically, the August new home sales reading was revised from 713,000 to 706,000. The June reading is still the cycle high. Cycle highs in new home sales have historically meant a recession isn’t coming soon. In September, new home sales were 701,000 which beat estimates by 3,000. The 3 month average fell from 700,000 to 691,000. Those are the highest 3 month average and the 2nd highest average of this cycle.

Unlike the existing home sales report which showed median prices increased 5.9% yearly to $272,100, median new home prices fell sharply. Monthly prices fell 7.9% to $299,400. Yearly price growth was -8.8%. That tightened the price gap between new and existing home prices as the difference is now $27,300. As you can see from the top chart below, the decline in prices was driven by a huge swing away from homes costing $400,000 to $499,999.

Source: Wall Street Journal

There was an increased share in houses costing from $150,000 to $199,000. This decline in prices drove the 15.5% yearly growth in new home sales. Supply stayed at 5.5 months. Remember, supply was 4.1 months for existing homes. Both inventory levels can increase slightly because of supply without it being problematic.

Now let’s look at the new home sales report from a long term perspective. As you can see from the chart below, even though new home sales are at a cycle high, on a population adjusted basis, they have been below the long term range for this entire cycle.

new.home.sales.population.adjusted.1963.2019

There is still room for more new homes to be built and the home ownership rate to increase. The problem is affordability. Even with the full labor market generating positive real wage growth and interest rates being near their record low, many millennials are having a difficult time affording housing. If the labor cycle ends soon, new home sales won’t get to the low end of the historical range for another few years. We might need to see home prices fall to get there.

Final October Consumer Confidence Reading

The final October University of Michigan consumer confidence index fell to 95.5 from 96 in the initial reading. That’s still above its reading of 93.2 in September. The current economic conditions index rose from 108.5 to 113.2 and the consumer expectations index rose from 83.4 to 84.2. Tariffs were mentioned negatively by 27% of respondents which is a 9% sequential decline.

The important story of this report is about home and vehicle buying conditions.

Source: University Of Michigan

Early in this cycle buying conditions were great, but the labor market was weak, making it tough for many to buy homes. In 2018, the labor market was stronger than early in the cycle, but housing was considered too expensive as buying conditions fell. Buying conditions were hurt by high prices and relatively high rates later in the year. It’s doubtful we’d ever see buying conditions improve and prices fall significantly if the labor market stayed strong. We’re currently seeing a modest rebound in housing because of the strong labor market and low rates.

Bloomberg Consumer Confidence

Comfort among full-time workers hit an all-time high as the labor market is proving solid real wage growth partially because of the decline in inflation. Sentiment among people in households where the income is $100,000 or more was the best since 2004 when the data started being calculated. Consumer expectations fell 0.5 to 49. As you can see from the chart below, the buying climate rose to a record high reading of 58. That’s great for retailers ahead of the holiday shopping season.

buying.climate.index.2019.oct.25

Conclusion

The fiscal deficit is absurdly high when you adjust for the business cycle. The new home sales report was solid. There was a big decline in homes sold between the price of $400,000 and $499,999. This lowered the median price of new houses sold sharply. Population adjusted new houses sold isn’t even at the low end of the historical range. The University of Michigan consumer sentiment index improved in October. Buying conditions for vehicles and houses are weak. The Bloomberg Consumer Comfort index was very strong and the buying climate index hit a record high.

.

include(“/home/aleta/public_html/files/ad_openx.htm”); ?>

Previous Post

Global Equities: The New Bull Market

Next Post

Early Headlines: Asia Stocks Down, Dollar Down, Oil Down, Gold Mixed, Yields Down, Court Blocks Mueller, Impeachment Inquiry, Transcript Omissions, Vote For A Socialist, Kimmel Plays Historian, Plus More – 22 Articles, 7 Graphics

Related Posts

Scammers Steal $300K Using Fake Blur Airdrop Websites
Uncategorized

FBI Warns Investors Of Crypto-Stealing Play-to-Earn Games

by John Wanguba
March 10, 2023
Maersk Almost Completing Russia Exit After The Sale Of Logistics Sites
Uncategorized

Maersk Almost Completing Russia Exit After The Sale Of Logistics Sites

by John Wanguba
February 20, 2023
Why Is ‘Staking’ At The Center Of Crypto’s Latest Regulation Scuffle
Uncategorized

Why Is ‘Staking’ At The Center Of Crypto’s Latest Regulation Scuffle

by John Wanguba
February 14, 2023
Mexico's Pemex Dismantled Resources Worth $342M From Two Top Fields
Uncategorized

Mexico’s Pemex Dismantled Resources Worth $342M From Two Top Fields

by John Wanguba
January 20, 2023
Oil Giant Schlumberger Rebrands Itself As SLB For Low-Carbon Future
Uncategorized

Oil Giant Schlumberger Rebrands Itself As SLB For Low-Carbon Future

by John Wanguba
October 26, 2022
Next Post

Early Headlines: Asia Stocks Down, Dollar Down, Oil Down, Gold Mixed, Yields Down, Court Blocks Mueller, Impeachment Inquiry, Transcript Omissions, Vote For A Socialist, Kimmel Plays Historian, Plus More - 22 Articles, 7 Graphics

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Browse by Category

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Browse by Tags

adoption altcoins bank banking banks Binance Bitcoin Bitcoin adoption Bitcoin market blockchain BTC business China crypto crypto adoption cryptocurrency crypto exchange crypto market crypto regulation decentralized finance DeFi Elon Musk ETH Ethereum Europe Federal Reserve finance FTX inflation investment market analysis Metaverse NFT nonfungible tokens oil market price analysis recession regulation Russia stock market technology Tesla the UK the US Twitter

Archives

  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • August 2010
  • August 2009

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized
Global Economic Intersection

After nearly 11 years of 24/7/365 operation, Global Economic Intersection co-founders Steven Hansen and John Lounsbury are retiring. The new owner, a global media company in London, is in the process of completing the set-up of Global Economic Intersection files in their system and publishing platform. The official website ownership transfer took place on 24 August.

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Recent Posts

  • Only 2 Exchanges Registered In Hong Kong As Crypto Ban Is Removed
  • Will Ethereum Outperform Bitcoin?
  • Is ReFi The Future Of DeFi?

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.

No Result
View All Result
  • Home
  • Contact Us
  • Bitcoin Robot
    • Bitcoin Profit
    • Bitcoin Code
    • Quantum AI
    • eKrona Cryptocurrency
    • Bitcoin Up
    • Bitcoin Prime
    • Yuan Pay Group
    • Immediate Profit
    • BitIQ
    • Bitcoin Loophole
    • Crypto Boom
    • Bitcoin Era
    • Bitcoin Treasure
    • Bitcoin Lucro
    • Bitcoin System
    • Oil Profit
    • The News Spy
    • British Bitcoin Profit
    • Bitcoin Trader
  • Bitcoin Reddit

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.

en English
ar Arabicbg Bulgarianda Danishnl Dutchen Englishfi Finnishfr Frenchde Germanel Greekit Italianja Japaneselv Latvianno Norwegianpl Polishpt Portuguesero Romanianes Spanishsv Swedish