dan ryan

How I run budget policy based on NY times policy choices... Click here

One of the interesting correlations the Calculated Risk does on a regular basis is the correlation between unemployment and housing starts. As seen here . The comment is unemployment lags housing by 12 to 18 months. So does this mean that we should see unemployment be reduced significantly in the next 24 to 36 months?  The economists at the University of Michigan don't seem to think this correlation will hold as they predicted the following:            Housing starts, expected to total just 605 thousand  units this year, recover to 807 thousand in 2011 and 1.13 million units in 2012.   I understand that this includes multifamily which I will assume to 20% so that would be in the neighborhood of 600-650 single family or on the twelve month lag in the neighborhood of 8.2 - 8.5% unemployment. This isnt too far from their 2012 estimate of 9.3%.  My bigger concern is that in 2013 will we be at 7.5-7.7% unemployment? I don't think so.  Therefore the lag may be a little more pron

We have a bit of a track record of slight improvement in the job market.  Weekly claims were at 439,000  and the four week average is now 443,000 which is slightly better than last week.  The trend continue to improve but a snails pace.  Job creation is thought to begin somewhere between 420,000 and 460,000 which suggest that we are experiencing slight job creation. This has been shown in the previous five to six months in which we have had some job creation. So we can take this as it is not getting worse but also that it is not getting measurable better.  We seem to be in a holding pattern that I see us sticking to for the next 24 to 36 months based upon the limited amount of appetitte for monetary stimulus ( see Bernake's comments ) and no appetite for fiscal stimulus as demonstrated by both the President and the new congress.

If these numbers  are not sobering than nothing can be.  I am surprised at the frankness of how bad it is and that it is going to be without any end in sight in the next two years.  I have started to see spin about how 2 million jobs in 2012 is good.  It is not good because it still leaves unemployment well over 9%. Are we saying that this is ok? This is recovery?  Oh and with this we add trillions to the national debt.  If we are willing to add trillions to the debt (I believe that we are and will) then why can't we at least speak of fiscal stimulus?  Have ware become follows of Schumpeter and Austrians? We have so much faith in the system that created extreme asset bubbles.  It appears so. 

While I may agree with some of Dr. Krugman's  analysis  related to other countries consumption taxes, I think that he misses the point that just because you have a different source of revenue that does equate to less  politics in how you spend the revenue including a larger social safety net

The Cleveland Fed released  this  yesterday indicated that core inflation has risen only 0.1% in October (1.1% annual).  In addition, trimmed inflation was unchanged.  On another note it was not housing that is dragging the inflation numbers as the indexes for rent and owner's equivalent rent both increased. Lastly the BLS  stated  that CPI without food and energy is  the smallest 12-month increase in the history of the index, which dates to 1957.  As noted  here  by Mark Thoma were continued to look a lot like Japan.  My hope now is that we do as well as they did but I don't really believe that to be the case.

Scotia Capital - November

Canadian Housing Starts  are trending down which could bode well for housing prices but maybe bad the Canadian economy. This is something to be watched closely as it unfolds over the next two to five years.

Canadian Housing Bubble??