Relevant and even prescient commentary on news, politics and the economy.

A housing market quandary

A housing market quandary: two completely contradictory reports on renting vs. ownership

There are three potential areas of concern for the economy in the next 12 to 24 months that I see:


1. Inflation – this looks temporary to me. Demand side effects will probably fade by the end of summer, and supply side bottlenecks should fade within the year.


2. Stock price evaluations – I strongly suspect these are near secular highs and are subject to a serious pullback in the next several years.


3. Housing – The biggest reason I don’t see this as being in a bubble is the lack of “fog-the-mirror” mortgages being originated. Take away reckless lending spurring short-term speculative demand, and there is only so much that the market can deviate from the norm. This means that any downturn would probably be closer to the 4% downturn between 1990 and 1992:

Why March’s big jump in real retail sales augurs well for big employment gains through summer

Why March’s big jump in real retail sales augurs well for big employment gains through summer

Yesterday I wrote that the steep decline in new jobless claims in the past 4 weeks likely presages another big monthly employment gain, on the order of 1 million or more jobs.


Another very big positive for the next few months in employment is the massive, stimulus-fueled jump in retail sales.


As I have pointed out many times, real retail sales (blue in the graph below, /2 for scale) tend to lead employment (red) by about 3-4 months. Here’s the long term YoY look from 1993 on, averaged quarterly to cut down on noise:
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’ve also included aggregate hours (gold) in the above. Hours tend to be cut more than jobs in recessions and increase faster in recoveries. The pandemic has been somewhat unique in that, for obvious public health reasons, jobs were cut entirely rather than just hours. Note also the “China shock” in the first few years after 1999, when both jobs and hours continued to be cut, even after sales had rebounded.

How Redistribution Makes America Richer

By Steve Roth (originally published at Evonomics)t https://evonomics.com/how-redistribution-makes-america-richer/

You hear a lot about bottom-up and middle-out economics these days, as antidotes to a half-century of “trickle-down” theorizing and rhetoric. You’re even hearing it, prominently, from Joe Biden:

They’re compelling ideas: put more wealth and income in the hands of millions, or hundreds of millions, and you’ll see more economic activity, more prosperity, and more widespread prosperity. To its proponents, it seems deeply intuitive or even obvious, a formula for The American Dream.

March housing permits and starts – don’t get too excited

March housing permits and starts – don’t get too excited

Don’t get too excited about this morning’s big jump in housing starts for March. In the first place, it wasn’t confirmed in either total or single-family permits, which both remain down from December and January, and the latter of which is the least of all housing numbers:



Also, the big jump in starts is mainly a rebound from February’s Big Texas Freeze. February and March starts together average 1599 annualized, which is significantly below the December and January pace.

Windsor, VA

Recently, in Windsor, Virginia, United States of America, a local police officer, Police Officer Gutierrez, pulled over Army Second Lieutenant Nazario; ostensibly for the lack of displayed license plate. As it was to turn out, a temporary plate was on display in the vehicle’s rear window. When Lt. Nazario slowly proceeded to a well lighted area in front of a convenience store, pulled over, and stopped, Police Officer Gutierrez, and a second, back up, officer approached the Lt.’s vehicle with guns drawn and pointed at Lt. Nazario while giving somewhat conflicting commands. Lt. Nazario is heard to say that he is afraid to get out of the car.

Was it reasonable force for the two police officers to draw to their weapons for a traffic stop after it was evident that there was no reason to make the stop in the first place? In the video, Police Officer Gutierrez is heard to say, “You received an order, obey it.” Do police have a god-given right to be obeyed? What is so suspicious about an army officer in fatigues near Hampton Roads, VA, (an area as aswarm with military installations and personnel as any in the world)? Why did the police officers demand that Lt. Nazario get out of his vehicle? Why not start with conversation? What right did the officers have to demand that the Second Lt. Nazario lie face down on the pavement? What compelled them to do so? Shouldn’t the police be required to produce proof of suspicious behavior before taking such drastic measures?

Coronavirus dashboard for April 19: Much great progress, and some problem children

Coronavirus dashboard for April 19: Much great progress, and some problem children

 

As an initial note, there is no significant economic data until Thursday this week, so don’t be surprised if I play hooky for a day or two….

Today let’s take a look at the latest coronavirus information.

There’s much progress on the vaccination front. I’ll let the CDC’s numbers speak for themselves:



Here’s the information graphically by age group as of last week:

The politics of vaccine-stretching

When the Pfizer and Moderna vaccines were first approved, it was clear that they were highly effective at preventing covid and that they would be in short supply for months.  The clinical trial data also suggested that, at least in the short-run, one dose of the vaccines would provide almost as much protection against covid as the two-dose protocol that was tested and approved by the FDA. 

This led a number of economists and public health professionals to argue that we could gain an edge in the fight against covid – and likely save tens of thousands of lives – by prioritizing first doses and delaying second doses (“first doses first”).  We could also stretch existing supplies by giving people half-doses, and by giving one dose to people who have recovered from covid and have some degree of natural immunity to reinfection, or simply by delaying their vaccination until more vulnerable people have been protected.

Most of the debate over vaccine stretching policies has been technocratic.  Proponents argue that first-doses-first and other vaccine stretching policies will save lives, and opponents point to various risks.  In my view the technocratic case for first-doses-first and other vaccine stretching policies is strong, but the politics are difficult.  Unfortunately, proponents of these policies have failed to think creatively about how to overcome political obstacles to vaccine stretching.  So let’s think about the political challenges and ask how the Biden administration might have been persuaded to try using first-doses-first, half-doses, and similar policies

The politics of first doses first are challenging

SCOTUS In the Shadows and Minority American Justice

SCOTUS Is Making New Law in the Shadows

April 15th, New York Times “Friday night’s injunction was at the 20th time since the court’s term began last October the justices have issued a shadow docket ruling altering the status quo.

Which brings to question, the more substantive the work the justices carry out through such unusual, unsigned, and unexplained orders; the more a “shadow docket” raises concerns about the court’s decision making transparency.

It leaves to questioning the underlying legitimacy of the high court decisions.

Recent years have seen a significant uptick in the volume of “shadow docket” rulings that are resolving matters beyond a singular issue and the issuing of orders changing the effect of lower-court rulings while they are appealed.

The most recent the Robert’s Court has taken up is California’s Covid-based restrictions on in-home gatherings to members of no more than three different households. The plaintiffs, who regularly hold Bible studies and prayer meetings in their homes, challenged the restrictions on the ground that they interfered with their right to the free exercise of religion as guaranteed by the First Amendment.

The Robert’s Court in what one scholar called the SCOTUS “most important free exercise decision since 1990,” the justices used the shadow docket to expand religious liberty.

The Trump administration sought emergency relief pending appeal 41 times in four years. Contrast this to the Bush and Obama administrations seeking such relief eight times in 16 years. The justices largely acquiesced to the Trump applications, granting 28 in full or in part.

African Americans, the Poor in Court and Sentencing Reform

Industrial production for March disappoints – but only on the surface

Industrial production for March disappoints – but only on the surface

As an initial note, retail sales for March blew out to the upside, but as expected due to cosnumers’ spending their latest pandemic stimulus checks. This does have implications for future jobs reports, but I will report on that tomorrow. But to the main point . . . 


Industrial production rose in March, but disappointingly – on the surface at least – did not recover to its level in January, as shown below in the graph of total production (blue) and the manufacturing. component (red):