Warren explains how present monetary policy is about housing as a chief economic driver, operating through mortgage rates, and how the Fed can manage this policy more effectively through its ability to set price as US currency monopolist.
The Fed Can Set Mortgage Rates: Guest Post by Warren Mosler
Posted by L. Randall Wray | Professor of Economics, University of Missouri at Kansas City
Posted by L. Randall Wray | Professor of Economics, University of Missouri at Kansas City
All I see is multifamily going up.... (apartments) that remain mostly vacant...
ReplyDeleteHere's an article:
http://www.housingwire.com/articles/26376-multifamily-construction-pushes-housing-starts
And nobody can even afford the apartments so they are co-habitating its cheaper per month...
rsp,
On another note, Q3 GDP growth was surprisingly high (~4%). I'm trying to figure out where this growth came from- obviously not from federal government NFA. Matt, any ideas?
ReplyDeletePCE and inventory growth.
ReplyDeleteJustin,
ReplyDeleteA seasonality we see is that the EITC is becoming pretty stimulatory in the months of Feb/Mar/Apr (after everyone gets their W-2s and 1099s by jan 30th and files) so that happened this year and flows were VERY strong in those months...
OK so based on that as Tom sees, the firms probably kept production up into 3rd qtr (things looked "ok" in 2nd with the heavy tax refund flows) ..... but when Congress didnt get the budget deal done by May 24th deadline, we went cold turkey into the sequester cuts on May 24th and the Debt Ceiling suspension was lifted and from May 24th thru about mid August, flows were WAY down... (Treasury had to take virtually all of the 70b sequester cuts between may 24th and the end of the FY as they didnt do much cutting while the budget deal was still on the table from late Jan thru May 24th) so accordingly inventories built as the govt NFA cuts from the sequester left inadequate incomes to be able to consume at the rates fomented by the strong flows in Feb/Mar/Apr and looks like inventories built here in the 3rd qtr...
Looks like Treasury front loaded the 70b in cuts starting May 24th and they were accomplished by about mid August...
then flows picked up from mid august till the end of Sept and then this 'shutdown' hit and looks like they took out about 40-50b in Oct... so this is probably going to hurt the 4th qtr CY...
FYoY they are down about 40B in top-line spending thru mid Dec... so we are going to learn a lot about how these flows affect things when we see the 4th qtr data come in..
SP500 earnings growth is being consistently being revised DOWN this qtr... based on some reports we get from FactSet... but have NOT gone negative as of yet... just "smaller growth" for now...
so accordingly there is a lot of 'confusion' out there... the govt policy is being very capricious and arbitrary and no one knows what the heck is going on...
It looks like 4th qtr will still be slightly positive (Warren's 'muddle thru') at this point but not for certain... the shutdown took a lot out in Oct... the current qtr will be instructive imo....
rsp,
Justin sorry it was about 40b in cuts starting May 24th not 70b see here page 187:
ReplyDeletehttp://www.whitehouse.gov/sites/default/files/omb/budget/fy2014/assets/tables.pdf
"Joint Committee Enforcement" of 48b for the year and I think they did SOME before May 24th... left about 40b when the deal fell thru on May 24th and looks like Lew front loaded it and he was done by about mid August...
rsp