–Domestic Terrorism, Mounting Virus Death Tolls, Deep Divisions Overwhelm Data
WASHINGTON (MaceNews) – The upcoming week’s events, an Inauguration Day in the armed camp “Green Zone” that is now D.C. amid threats of violence at statehouses across the country, overshadows what little economic data will be published.
The week begins with a holiday, progresses to a Tuesday when many government workers will feel it’s too much of a hassle to try to get to their offices through all the security, and a Wednesday devoted to the heavily guarded inauguration of Joe Biden and Kamala Harris – and the possible beginning of Donald Trump’s Senate trial.
Thursday the Commerce Department will report December housing starts, a metric that through November saw new production up 12.8% in the past year. In fact one industry executive called the buying surge the best in history, not just exceptionally strong during a pandemic.
New home projects started are running above a 1.5 million annual rate, that used to be considered a full-production schedule. Now it’s still low enough to be a supply constraint, boosting prices.
As Boston Federal Reserve Pres. Eric Rosengren told CNBC Friday, the housing boom is not a reason to question accommodation, the Fed’s stance is the reason for it, keeping mortgage rates low. He said it’s all the more reason for the Fed to keep buying mortgage-backed securities.
On Friday the National Association of Realtors reports a different metric, not new production that adds to GDP but the transfer of the existing home base properties that mainly fuels Realtor’s income. It’s followed closely, though, as sort of a sentiment indicator.
New home production is not running sufficiently hot to kick enough used houses on to the market so sales of existing homes dropped in November by 2.5% but only to an annual rate of 6.69 million, a still blistering pace that was 25.8% above a year earlier. The buying pressure has elevated prices 14.6% from a year earlier. The affordability crunch is why starter home sales, in the up to $250,000 range, are a double-digit minus, as if the massive amount of unemployment wasn’t enough of a limiting factor.
The only other major data due in the week is the Thursday tally of new unemployment benefit claims, which in the latest report showed an actual increase of 1,151,015 unadjusted. That report showed claimants as of the Dec 26 week were a massive total of 18,406,941. The Richmond Fed’s alternative unemployment rate came in Friday at 9.6% for December, vs the monthly jobs report’s 6.7%.
Placing the upcoming economic data in proper perspective are the data suggesting the first quarter will not be nearly as strong as hoped. December precursor retail sales were down 0.7%. The various GDP trackers says first quarter growth up around 6% and being downgraded as fresh data comes in.
In a broader context. seeing the District of Columbia “green zone” ringed by concentric circles of security, barriers and fences backed by more than 20,000 National Guard troops and personnel from multiple police jurisdictions, is to know economic data is not the nation’s chief concern right now. The Fed’s Rosengren, again on CNBC Friday, said that even disregarding the threat of domestic terrorism, the nation is facing a pandemic control problem, not a shortage of credit. There will be no full economic recovery until people feel safe to travel and visit restaurants, he said. With the virus death toll climbing toward 4,000 every day, there’s a lot to worry about besides economic data.
The Capitol rampage, in which crowds of marauders seemed intent on capturing and perhaps killing some government officials like the vice president and speaker of the House, may have been a one-time eruption or more ominously, the beginning rumbles of a gathering storm that will plague the country like a chronic disability. It’s a question of far more significance, particularly in the coming week, than whether economic data improve or deteriorate.
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Contact this reporter: denny@macenews.com.
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