The Good Economic News Continues

CNBC posted an article today about housing starts in December.

The article reports:

U.S. homebuilding surged to a 13-year high in December as activity increased across the board, suggesting the housing market recovery was back on track amid low mortgage rates, and could help support the longest economic expansion on record.

Housing starts jumped 16.9% to a seasonally adjusted annual rate of 1.608 million units last month, the highest level since December 2006. The percentage gain was the largest since October 2016. Data for November was revised higher to show homebuilding rising to a pace of 1.375 million units, instead of advancing to a rate of 1.365 million units as previously reported.

Economists polled by Reuters had forecast housing starts would increase to a pace of 1.375 million units in December.

Housing starts soared 40.8% on a year-on-year basis in December. An estimated 1.290 million housing units were started in 2019, up 3.2% compared to 2018.

Building permits fell 3.9% to a rate of 1.416 million units in December after hitting their highest level in more than 12-1/2 years in November.

…Single-family homebuilding, which accounts for the largest share of the housing market, jumped 11.2% to a rate of 1.055 units in December, the highest level since June 2007. Single-family housing starts rose in the Midwest and the populous South. They, however, fell in the Northeast and West.

The increase in housing starts is an indication of a healthy economy. The fact that single-housing starts rose in the Midwest and the South and declined in the Northeast and West is a further indication that Americans are voting with their feet.

Today’s Economic Numbers

Investors.com posted an article today analyzing the jobs report that was released today. It is a mixed picture.

In chart form:

The chart shows a decreasing official unemployment rate, but it also shows what the unemployment rate would be if the labor participation rate used to calculate the unemployment rate were constant. The number of people who are not currently in the labor force is extremely high.

The article reports:

To further muddle the picture, January’s employment report showed a gain of 21,000 manufacturing jobs. Construction added 48,000 workers, the most since the recession, after a sharp weather-related drop in December. Meanwhile, retailers shed 12,900 jobs and cut the average workweek to 29.7 hours.

“We shouldn’t be surprised that the job gains are not at the level that they were in October and November,” said Keith Hembre, chief economist with Nuveen Asset Management. “But I am surprised we didn’t get more of a bounceback.”

Other unexpectedly weak data in the past few weeks include sharp drops in durable goods orders as well as new- and pending home sales.

Federal Reserve policymakers noted the housing pause at their January meeting, but decided other improvements in the economy were enough to justify continuing to taper asset purchases.

Hembre said the latest data shouldn’t change that outlook.

At some point the Federal Reserve policymakers are going to have to taper their asset purchases. The longer they postpone that, the more of a shock it is going to be. Unfortunately, the Federal Reserve has propped up the dollar and the stock market to the point where there will not be a soft landing. Because of the financial policies of the Federal Reserve for the past ten or twelve years, we will probably experience a very bumpy landing some time in the next six months. I believe we will come through it, but I also believe it will be very bumpy.

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