note: all offensive images have been stripped from this report as it’s posted here; to view the entire report, including censored images, go here

even without the shortened market week and congress not in session due to the holiday, it was a fairly uneventful week in the economics blogosphere, where there were just a few reports to cover & where it seemed many bloggers took a long weekend off…fiscal cliff opining continued, but without any news it was more subdued…the administration & congressional leaders met and then put out their canned press releases about progress being made, but none of the positions outlined afterwards suggested anyone’s stance had shifted; Republicans want to keep the Bush tax cuts and $5 million estate tax exemption, postpone the sequestered billions in spending cuts for the Pentagon, and pay for that with cuts to entitlement programs and a tax code overhaul; a large faction of Democrats are leaning towards going over the cliff, ie letting everything expire and bargain with a clean slate in the new year, and the administration is still pushing for its $4 trillion “grand bargain”, which includes $1.6 trillion in taxes and $2.4 trillion in spending cuts over 10 years…since it appears some business people are a bit innumerate, we should explain that administration plan to bifurcate the Bush tax cuts, ie, leave rates on amounts below $250,000 at their current levels and allow rates above $250K to revert to their Clinton era level of 39.4% from their present 35%, leaves rates on the first $250,000 low for everyone, just as they are now; there wont be a sudden increase in taxes on those making a bit more than $250,000…for instance, someone earning $254,400 would only be taxed $100 more, just on that extra $4400 of income..

one of the few official economic releases of the week was the Regional and State Employment and Unemployment Summary for October from the BLS; this covers the same data covered in the monthly employment situation released the first friday of each month, breaking the two surveys down by state and region…in October, nonfarm payroll employment increased in 35 states and in DC and decreased in 15 states, with the largest monthly job gains logged by California which gained a seasonally adjusted 45,800 new jobs, and Texas, which increased payrolls be 36,000; Utah saw the largest month over month percentage increase in employment, with a gain of 0.7% jobs over septermber, followed by Louisiana and Montana with job gains of 0.6% each…the largest net job loss for any state was in Michigan, where employment fell 16,500; New Jersey also saw employment fall by 11,700, and Minnesota saw 8,100 less payroll jobs in October; percentage wise, the greatest job losses were in Alaska & Rhode Island, which both saw their payrolls fall by 0.5% for the week…October unemployment rates were also calculated for the states using data from the household survey, which we know to have a significant margin of error; 37 states and D.C, were reported to have recorded unemployment rate decreases, seven states showed unemployment rate increases, and six states had no change…as has been the case all year, Nevada still has the highest unemployment rate at 11.5; Rhode Island was second with a jobless rate of 10.4%, and despite adding 295,300 jobs this year and continuing to lead the monthly surveys, California’s unemployment rate remains in double digits at 10.1%…on the other end of the scale, North Dakota had the lowest jobless rate at 3.1%…the largest declines in unemployment were seen by S.Carolina, which saw its jobless rate fall from 9.1% to 8.6%, Alaska, which saw its rate fall from 7.5% to 7.1%, and Wisconsin, where unemployment fell from 7.3% to 6.9%…the adjacent bar graph from bill mcbride has the states arranged from the highest october jobless rate on the left to the lowest on the right, which is indicated by the red; he also includes in a blue extension a representation of the highest unemployment rate reached by each state during this recession; all states are now below their maximum, but New York and New Jersey, the two states which suffered the most disruption from Hurricane Sandy, are but a few tenths away from their highest jobless rates, and with weekly reports indicating more layoffs, they may yet see another jobless rate increase that could put them at their highs for this cycle..

there were a couple reports on housing earlier this past week; the first one we’ll look at comes from the Census bureau and provides data on New Residential Construction for October (pdf), although it does have a wide margin of error; as reported, housing starts in October were at a seasonally adjusted annual rate of 894,000, which was 3.6% above the revised September estimate of 863,000; however, the 90% confidence interval on that gain was ±13.1%, which puts the new starts gain outside of the range census calls statistically significant; however, that caveat didnt stop the media from declaring that US new home starts jumped to the fastest pace in 4 years; nonetheless, the year over year gain for October was 41.9%, and since the ±15.9% confidence interval doesnt include zero, we can still be assured that annual growth in starts is statistically significant…of the starts in October, single-family homes were started at an annual rate of 594,000;  which was an insignificant 0.2% (±10.3%)* below the revised September figure of 595,000, while the annual unit start rate in buildings with five units or more was 285,000…looking for an impact from hurricane sandy, we note there was a seasonally adjusted decline of 6.5% of starts in the Northeast, but with a confidence interval of ± 42.4% on that regional data, we certainly cant accurately quantify the effect…and even though annualized starts reportedly rose from 198,000 to 232,000 in the West, the margin of error at ± 28.2% makes that figure highly suspect too… this report also includes data on new residential permits and home completions…building permits issued in October were at a seasonally adjusted annual rate of 866,000, which was  2.7% (±0.8%) below the revised September rate of 890,000...still, it’s 29.8% (±1.8%) above the October 2011 estimate of 667,000, clearly confirming that permits are increasing…single-family permits issued were at a rate of 562,000, 2.2% above the revised September figure of 550,000, while permits for five units or more were issued at a rate of 280,000…housing completions in October were at a seasonally adjusted annual rate of 772,000,14.5% (±15.6%) above the September estimate and 33.6% (±17.3%) above the rate of October last yearsingle-family housing completions were at a rate of 542,000; while the annual completion rate for units in buildings with five units or more was 226,000…in addition to graphing data on 44 years of total housing starts, bill mcbride also graphs separately 43 years of census data on single family and multiple unit starts and completions on a rolling 12 month basis, which we’ll include side by side below; on the left, you see the graph of starts and completions for housing with more than 5 units; blue line is for starts and the red line is for completions; a few observations are obvious; first, construction of multifamily units over the last couple decades has been far below the historical norm, not even considering that our population has grown; second, multifamily starts have almost tripled since they fell to an annual rate of nearly 80,000 in 2010; and it should also be obvious that the multifamily completion line follows and lags the multifamily start line by roughly a year…on the right, we have the graph of single family starts and completions since 1969; again, the blue line is for starts and the red line is for completions; here you can note a shorter lag time between starts and completions, also contrast the early decade single family construction boom with virtually no bubble in multifamily units, and see that unlike the major recovery in multifamily building, there is not yet much new activity in single family construction, where both starts and completions are less than a third of the peak…perhaps this over-weighting towards multifamily units is why we arent seeing the expected increase in residential construction jobs

 

the other housing market report released this week was the October data on sales of previously occupied homes, or Existing-Home Sales from the National Association of Realtors…total existing homes sales (including single family, condos, et al) rose 2.1% in October to a seasonally adjusted annual rate of 4.79 million from a downwardly revised 4.69 million in September…since the last part of this month coincided with the arrival of Sandy on the east coast, declining sales at a 1.7% annual rate in the northeast region offset some of the gains in unit sales elsewhere; sales in the West were up at a 4.4% annual rate, while there was a 2.1% gain in sales in the South and a 1.8% increase in the Midwest (no margin of error given; this is data from polling of realtors, who are infallible) …nonetheless, total home sales were still 10.9% above those of the same month last year, which obviously needs no seasonal adjustment…the October national median price for all existing housing types was $178,600, which was 11.1% above the median of a year ago; the national average for a 30 year fixed mortgage during October was at record low 3.38%, 17% lower that the 4.07% mortgage rate of october 2011 …the NAR reports that distressed sales, ie foreclosures and short sales, accounted for 24% of total sales, the same percentage as last month, which was questioned by bill mcbride, who noted that other data suggested a decline in the share of distressed sales…half of the distressed sales were foreclosures, which sold for 20% less than the going price for similar properties, and half were short sales, which were typically discounted 14%…2.14 million previously occupied homes remained available for sale at month end, which represented a 5.4-month supply at the current sales pace, down from the 5.6 month supply in september, 21.9% below a year ago and the lowest housing inventory on the market since February 2006…the median time a house was on the market was 71 days in October, up a tad from 70 days in September, but down 26.0% from the 96 day median iin October of last year…32% of homes sold in October were on the market for less than a month, while 20% were on the market for six months or longer…first-time buyers accounted for just 31% of home purchases in October, whereas a normal percentage of first time buyers would be closer to 40%; first-time buyers accounted for 32% in September and 34% in October 2011; meanwhile, all cash sales accounted for 29% of October sales, unchanged from a year ago, while investors bought 20% of the homes sold, more than the 18% they bought a year ago…despite the 1.7% drop in sales in the Northeast, the median price in that region was $232,600, which was 4.6% above a year ago; sales in the Midwest rose 1.8 and the median price was $145,600, up 10.6 percent from October 2011, while home sales in the South increased 2.1% with median sales price of $152,200, 8.2 percent above a year ago, and sales in the West rose 4.4% in October and sold for a median price of $242,100, 21.2% higher than October 2011…we’ll again include below two charts from bill mcbride which illustrate these NAR reports; to the left is a chart showing seasonally adjusted monthly existing home sales since January 1994; the obvious sales spikes in 2009 and 2010 were precipitated by the first time homebuyer tax credits; part of the current sales increase is likely due to Fed’s action to lower mortgage interest rates, making homes more affordable; on the right is a bar graph for 8 years of actual monthly existing home sales; without the seasonal adjustment, the boom years of 2005 & 2006 are obvious in darker blues, with this years sales through October in red showing some recovery from the long slump…& the seasonal pattern of strong summer sales & winter doldrums is also apparent…

 

there was also a bit of news on the global warming front this week…on Tuesday, the World Meteorological Organization (WMO).released their annual report on 2011 greenhouse gases; the amount of carbon dioxide in the atmosphere reached a record 390.9 parts per million (ppm) in 2011; which is about 40% higher than pre-industrial atmospheric levels of CO2.. atmospheric methane also hit a new high of about 1813 parts per billion (ppb) in 2011, which is 259% of the pre-industrial level, although much of the increase in methane came from agriculture, 40% comes from natural sources and an acceleration since 2007 was noted…nitrous oxide from a wide range of natural and anthropogenic sources, including oceans, soil, burning, and fertilizer was about 324.2 parts per billion in 2011, which was 1.0 ppb above 2010 and 120% of the pre-industrial level; nitrous oxide is 298 times more heat trapping than equal emissions of carbon dioxide over a 100 year period and also contributes to the destruction of the ozone layer, which screens harmful ultraviolet rays from the sun…combined, these and other minor greenhouse gases caused a 30% increase in radiative forcing (the climate warming effect) between 1990 and 2011…these greenhouse gas stats from the WMO served to reinforce a new report released on Sunday by the World Bank called Turn Down The Heat (pdf) which predicted that average world temperatures rise more than 4°C  (7.2 °F) by the end of the century even if governments stood by their current emissions targets, and that would trigger a “doomsday scenario,” of heatwaves, collapsing ecosystems, rising sea levels and crop failures; most of the warming is expected to occur over land with a range of increases up to 10°C (18°F); increases of 6°C (10.8°F) or more in average summer temperatures are expected in the Mediterranean, North Africa, Middle East and the central United States, while the warmest July temperatures between 2080-2100 in the Mediterranean are expected to approach 35°C – about 9°C (16.2F) warmer than the warmest present day Julys….the report went into some detail about the consequences for various regions of the globe, especially in light of an expected 1 meter in sea levels, and warned “The world must tackle the problem of climate change more aggressively,”…much of the boilerplate was pretty much standard fare for such a report, not much different than the warnings issued by the IEA (International Energy Agency), which forecast an 11°F global temperature rise, the similar report from the IPCC (Intergovernmental Panel on Climate Change) last year, or even the report earlier this month from PricewaterhouseCoopers, the largest of the big four accounting firms, which warned businesses to prepare for catastrophic impacts from climate change…what makes the World Bank report and warnings especially noteworthy is that the World Bank has been widely condemned by environmental groups for investing heavily in new coal fired generation facilities around the world (over $4 billion since 2008) which means they alone will be responsible for more than a billion tons of CO2 emissions over the next four to five decades..in fact, despite all these calls for action on climate climate change and CO2 emissions from all quarters, there are still 1,200 new coal-fired power plants being built or planned around the globe; in fact, coal’s global share of primary energy consumption has already increased to 30% and future increased percentages are already assured

(the above is my weekly commentary that accompanied my sunday morning links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion, and also includes other links of interest…if you’d be interested in getting my weekly emailing of selected links that accompanies these commentaries, most coming from the aforementioned GGO posts, contact me…)