U.S. Housing Starts Grew In November U.S. housing starts rose last month to the highest level in more than a year, driven by gains in single-family home building in the South and West.
Housing starts rose 3.3% in November from the prior month to a seasonally adjusted annual rate of 1.297 million, the Commerce Department said Tuesday. Residential building permits, which can signal how much construction is in the pipeline, fell 1.4% to an annual pace of 1.298 million last month.
Single-family building in the South and West both reached their highest monthly rates since July 2007.
Housing starts in October, which rose after being held down by hurricane effects in September, were revised down to a 1.256 million annual pace from an initial estimate of 1.290 million. Permits, which tend to be more reliable, were revised up to a 1.316 million rate from a 1.297 million rate. (…)
In November, multifamily construction of buildings with two or more units ticked down 1.6% from a month earlier, while permits for this same category declined 6.4%.
U.S. Existing-Home Sales Jumped in November Sales of previously owned U.S. homes rose in November to the strongest pace in more than a decade, the National Association of Realtors said Wednesday.
Existing-home sales increased 5.6% in November from the prior month, to a seasonally adjusted annual rate of 5.81 million, the strongest reading since December 2006, the National Association of Realtors said Wednesday. (…)
Sales in November were up 3.8% from a year earlier, and grew on the month in all regions except in the West.
Haver Analytics adds:
The number of homes on the market declined 7.2% (-9.7% y/y) to 1.670 million, the lowest level since January. There was a record low of 3.4 months’ supply of homes available for sale.
Source: Dimitri Delis, Piper Jaffray (via The Daily Shot)
Vacation Perks and Retirement Benefits Are Propelling Worker Pay Packages Overall compensation is rising at the fastest rate in two years, according to Labor Department data
Private-sector workers’ average hourly compensation, including both pay and benefits, advanced 4% from a year earlier in the third quarter, according to new Labor Department data. It’s the best gain in total compensation since the same quarter in 2015.
Benefits increased 4.6% from a year earlier, the best gain in more than two years. Back in 2014 and 2015, health-insurance benefits rose alongside the implementation of the Affordable Care Act.
The increase over the past year is being driven by more paid leave and retirement benefits. Retirement benefits, measured at an hourly rate, rose 11.2% from a year earlier. Paid leave improved by 5%. Insurance costs, which includes health insurance premium paid by employers, rose 3.5% from a year earlier. (…)
From a decade earlier, when the recession began, benefits have increased more than 30%, while wages and salaries are up about 25%.
The Labor Department report did show wages and salaries for private-sector workers advanced 3.7% from a year earlier, which was also the best gain in two years.
The data from the Employer Costs for Employee Compensation report is one of several recent measures showing somewhat firmer wage growth than the 2.5% annual improvement in average hourly earnings found in the closely watched jobs report. For example, weekly pay, which accounts for working more hours is rising at a better rate than hourly earnings.
Due to its methodology, the Labor Department cautions against reading too much into trends over time found in the Employer Costs for Employee Compensation report. But still it’s of interest to economists because it provides additional details on what’s driving compensation changes.
Tax reform has passed. What now? Having been told by Democrats that tax cuts will help only the rich, most Americans are in for a pleasant surprise
(…) The tax reform has important economic and political implications. Start with the economics. The bill doles out a fiscal stimulus of about 0.7% of GDP in 2018 and 1.4% of GDP in 2019. This should boost growth a little, but it will probably also quicken the pace at which the Federal Reserve raises interest rates to stop the economy from overheating. The Fed’s model says that deficit-financed tax cuts worth 1% of GDP eventually raise interest rates by 0.4 percentage points (see article). Janet Yellen, the Fed’s outgoing chair, told a press conference last week that the central bank does not want to stand in the way of faster economic growth, and will only concern itself with the tax bill to the extent that its affects inflation and employment. It surely will, because the fiscal stimulus dwarfs the likely boost to the underlying productive capacity of the economy. The Tax Foundation, a think-tank that is usually optimistic about the effect of tax cuts on growth, projects that the bill will increase long-run GDP by only 1.7%. By its calculations, this will add about 0.3 percentage points to annual GDP growth over the next decade. (Others are less optimistic.) (…)
Yet there are two areas of fresh complication. First, owners of so-called pass-through businesses, whose profits flow directly onto the tax-returns of their shareholders, will receive a large tax cut. That, and the cut to the corporate tax rate, will increase the incentive for individuals to ask accountants to turn their wages into business income. Second, the bill contains complex new rules regarding international trade. For example, profits from exporting intellectual property are taxed at a lower rate of about 13%. Such rules are bound to be gamed by tax planners. And the export subsidy may violate World Trade Organisation rules—foreign finance ministers have already complained to Steve Mnuchin, the treasury secretary.
(…) Fewer than one in five Americans expect to benefit personally next year. Americans think, rightly, that the bill’s main beneficiaries are the rich. Yet its unequal effects will be sharpest only if its income tax cuts are allowed to expire after 2025. In the meantime, four in five Americans can expect a tax cut next year, according to the Tax Policy Centre, a think-tank. (…)
The most significant political consequences are long-term. The expiry of tax cuts for individuals is a ticking time-bomb in the tax code. It will explode just as America approaches a budget crisis, driven by rising spending on health care and pensions for the elderly. This gap will probably eventually be plugged by a combination of tax rises and spending cuts. But by cutting taxes now, Republicans have moved the starting point for any future negotiations. Deeper eventual cuts to entitlement spending now look likely. Some Republicans want to get started on that project now: Paul Ryan, the Speaker of the House, is keen to move onto welfare reform in 2018—a remarkable aim in an election year. (…)
Another consequence stems from the way Republicans maneuvered to pass this bill with a simple majority (the bill passed the House by 224 votes to 201, in the Senate, 51-48) using sunset clauses that may never really sunset. No doubt this will be amply used in the future, even more so by Democrats if they ever retake the House. What that means is that the usual checks and balances on deficits and debt levels will no longer operate. Right when American baby boomers are turning 70 en masse.
Government debt sales are set to more than double in 2018, lifting net issuance to $1.3 trillion, the most since 2010, according to JPMorgan Chase & Co. estimates. With the Federal Reserve shrinking its bond holdings and deficits poised to swell even before taking into account the tax overhaul, all signs point to higher financing costs. (…)
By Credit Suisse’s calculation, with the Fed pulling back and issuance surging, the slice of debt sales available for price-elastic buyers to absorb will rise to about 60 percent by the end of 2019, from 54 percent now. It would be their biggest share since the early 2000s. (…)
With entitlement costs heading higher, the U.S. debt burden was already projected to increase by $10 trillion in the next decade. Now the tax overhaul could boost the deficit by $1 trillion in the period. (…)
AT&T pegged the timing of the bonus to the measure’s enactment and said workers will get paid over the holidays if he signs the bill before Christmas.
The bonus would apply to all union-represented workers, non-union employees and front-line managers based in the U.S. The company recently employed about 250,000 people. AT&T said it was the first bonus of its kind from the telecom company.
AT&T’s plan to pay the bonus also comes as it faces a lawsuit from the Justice Department to stop its takeover of Time Warner Inc. (…)
Similarly, Fifth Third, a Cincinnati-based bank with $142bn in assets, said it would pay more than 13,500 employees a $1,000 bonus while raising its minimum wage to $15 an hour. Senior managers and top executives would not receive a special payment, it said. (FT)
- Here is the Google search frequency for the phrase “buy bitcoin with credit card.”
Source: Google Trends, h/t @jessefelder (via The Daily Shot)