August 09, 2013
Winding down Fannie and Freddie
From the Daily Herald:
Speaking Tuesday in Arizona, President Obama endorsed the bipartisan efforts of [Senator Bob Corker (R-TN) and Senator Mark Warner (D-VA)] to wind down Fannie Mae and Freddie Mac as a first step in making certain that the nation does not suffer again through a housing finance crisis.
"For too long, these companies were allowed to make big profits buying mortgages, knowing that if their bets went bad, taxpayers would be left holding the bag," Obama said in Phoenix. "The good news is that there's a bipartisan group of Senators working to end Fannie and Freddie as we know them. I support these kinds of efforts."
Let me explain why I also endorse these recommendations.
May 12, 2013
How Fannie Mae made its profit
Mortgage buyer and insurer Fannie Mae was in the news again this week.
March 27, 2013
Understanding the housing bubble
A key reason that I was insufficiently worried in 2005 about bad mortgage loans being made at the time was that the people who funded the loans-- most importantly, the packagers and buyers of private-label mortgage-backed securities-- had more motivation and resources to evaluate the risks accurately than I did. That they made an incredibly costly mistake is now indisputable. But the question remains, why?
January 30, 2013
GDP falling again
The BEA released today its estimate of 2012 fourth-quarter real GDP, which declined slightly from the third quarter. How scary is that?
January 23, 2013
Links for 2013-01-23
Quick links to a few items I found of interest.
January 01, 2013
QE3 and beyond
Now that we've closed the books on 2012, I thought it might be useful to take a look at where monetary policy has led us over the last four years.
July 06, 2012
Current economic conditions
I see both dark clouds and rays of hope.
April 27, 2012
Sluggish U.S. growth continues
The Bureau of Economic Analysis reported today that U.S. real GDP grew at a 2.2% annual rate during the first quarter, down from the 3.0% growth of 2011:Q4, and below the 2.4-2.9% range that the FOMC indicated yesterday it is anticipating for 2012 as a whole. I see some reasons to agree with the Fed that the rest of the year may be slightly better than the first quarter.
April 14, 2012
Links for 2012-04-14
Quick links to a few items I found interesting.
November 06, 2011
Autos, housing, and the business cycle
Here I offer some observations on what's been holding back the recovery.
October 30, 2011
Home Affordable Refinance Program
Last week the Federal Housing Finance Agency, Fannie Mae and Freddie Mac jointly announced changes to the Home Affordable Refinance Program (HARP) with the goal of making it easier for some households to refinance their mortgages at lower interest rates. Here I offer some thoughts on this proposal.
June 02, 2011
A weakening economy
Incoming data over the last two weeks paint a consistent picture that the U.S. economy, which had been growing at a disappointingly slow rate, has weakened further.
December 29, 2010
Looking back at the Great Recession
Some people use the end of December as an opportunity for a retrospective on the year. But I decided to take a look back at the last three years, by way of updating some comparisons I made in April 2009 between the Great Recession and the average characteristics of other postwar recessions.
August 25, 2010
More thoughts on what to expect from the Fed
There is disagreement within the FOMC. How will it be resolved?
August 08, 2010
Current economic conditions
Last week's new economics data were a mixed bag. But on balance I'd have to say I'm more discouraged than when the week began.
July 26, 2010
More disappointing news
Just a quick note on a couple of new data releases today.
July 03, 2010
No double dip
Although many people are concerned about the possibility of a second economic downturn, I continue to see an economy that is growing, albeit significantly more slowly than we would have wanted.
June 23, 2010
Links for 2010-06-23
Tim Duy thinks the fanfare about a new Chinese currency policy is overdone:
The PR overload suggests the Administration is desperately in need of a "win," no matter how trivial.... While China appears willing to adjust the parity rate, changes are likely to be more window dressing than anything else. The industrial base shifted from the US to China over the past twenty years, a transition aided by the Clinton Administration's commitment to a strong dollar, and it is not going to come rushing back for a few percentage points of currency value. The structural shift has happened, and it won't reverse easily.
When Bill McBride says he expects house prices to decline, I pay attention:
When months-of-supply is below 6 months, house prices are typically rising-- and above 6 months-of-supply, house prices are usually falling.... We are much closer to the price bottom now than in 2008, and I don't expect that severe of a price decline. But I do expect house prices to fall in the 2nd half of 2010 and into 2011-- probably another 5% to 10% for the major house price indexes (Case-Shiller and CoreLogic).
A federal judge overturned the moratorium on new deepwater offshore drilling:
"An invalid agency decision to suspend drilling of wells in depths of over 500 feet simply cannot justify the immeasurable effect on the plaintiffs, the local economy, the Gulf region, and the critical present-day aspect of the availability of domestic energy in this country," [U.S. District Judge Martin] Feldman wrote....
The temporary injunction by [Judge] Feldman appears unlikely to bring a swift resumption of deepwater drilling: Oil companies say they're reluctant to start new ventures as an uncertain appeals process unfolds.
April 28, 2010
Why Adam ate the apple
In my last post, I discussed how the run-up of U.S. mortgage debt during the last decade was funded. One important element was the sale of commercial paper that helped fund the purchase of some mortgage-related securities. Here I comment on why it was hard for some institutions to resist buying that commercial paper.
April 25, 2010
Follow the money
What happened to housing and financial markets over the last decade? To find out, follow the money.
March 24, 2010
Not a textbook rebound
Is this as good as it gets? For the time being at least, it seems to be.
March 09, 2010
Modeling problems in credit markets
On Friday I joined fellow blogger Mark Thoma (and a good many other economists) at a very interesting conference on financial markets held at the Federal Reserve Bank of San Francisco. Here I share some ideas I expressed at the conference about the directions I feel this research ought to go.
January 31, 2010
John Cochrane on the credit crisis
January 13, 2010
Links for 2010-01-13
Stuart Staniford, who earlier had been persuaded that global oil production might have already peaked, now comments on the potential for increased production from Iraq to push the peak up to a decade down the road.
King Banaian on disturbing developments in Argentina and Venezuela.
Economists comment on the role of the Fed in the housing bubble. Two in particular worth emphasizing:
Marvin Goodfriend: Interest rate policy was appropriately stimulative in the 2002-3 period. But rates should have been raised less mechanically and more aggressively in 2004-5 on grounds of the usual macroeconomic conditions.... A somewhat tighter stance of interest rate policy then could have cut off the last year or so of the house price appreciation and prevented the worst part of the subsequent adjustment.
Mark Gertler: If we could go back in history and make one policy change, I'd go after sub-prime lending. Absent non-prime lending, the likely outcome of the housing correction of 2007 would have been a mild recession like 2000-2001, and not the debacle we experienced.
January 05, 2010
Bernanke grades the Fed
Fed Chair Ben Bernanke's observations on monetary policy and the housing bubble have received a lot of attention. Like many other commentators (e.g., Arnold Kling, Paul Krugman, and Free Exchange), I agree with Bernanke's conclusions, but only up to a point.
December 19, 2009
What went wrong and how can we fix it?
December 13, 2009
Should the Fed be the nation's bubble fighter?
That's a question recently taken up by the Wall Street Journal. Here are my thoughts.
December 02, 2009
Recent indictors continue to support the impression that we're in the midst of a weak economic recovery.
November 22, 2009
Factors in local house price declines
UCSD Ph.D. candidate Sam Dastrup has completed a very interesting study with his advisor Professor Richard Carson of what accounts for differences across U.S. communities in the magnitude of the decline in real estate prices that we've seen over the last several years.
September 29, 2009
Home prices stabilized, but...
The S&P/Case-Shiller home price indices registered another month of increase in July. That's a critical bit of favorable news, since continued declines in home prices would mean further increases in default rates and new stresses on financial institutions.
September 14, 2009
Guest Contribution: Reforming Banking by Reforming Housing
By Simon van Norden
In my previous post, I wrote about some of the evidence linking serious banking crises to real estate market collapses. That evidence is far from iron clad; it is simply the observation that many banking crises in mature economies have their origins in a real estate boom and bust cycle. However, the idea is also intuitively appealing.
August 30, 2009
Econbrowser Emoticon shifts to neutral
|Sep 13, 2006|
|Feb 21, 2007|
|Apr 25, 2007|
|Jun 27, 2007|
|Oct 5, 2007|
|Jan 4, 2008|
|Aug 30, 2009|
If you've only been following Econbrowser since 2008, you may have thought that the crabby countenance in the upper-right corner of our main page was a permanent fixture, conveying our general grumpiness about the state of the economy or perhaps life in general. Despite having been stuck in the pessimistic mode for quite some time now, the emoticon was in fact always intended to be a dynamic feature, adjusted from time to time to provide readers with our overall impression of incoming data. The table on the left provides links to each occasion that our Little Econ Watcher's countenance has changed in the past.
Last week's data persuaded me to move the Econbrowser Emoticon back into neutral, signifying that I now judge overall output to be growing slowly rather than declining. Here are details on the evidence that prompted this change in assessment, and what it signifies.
August 25, 2009
Good news on house prices
I was happy and surprised to see that the nominal S&P/Case-Shiller seasonally adjusted Home Price Index rose by 0.75% in June for a composite of 20 U.S. metropolitan areas.
August 11, 2009
Paying for design flaws
Updates on what this is going to cost you and me.
July 05, 2009
Off-balance-sheet federal liabilities
Just how much has the U.S. government promised to pay?
June 11, 2009
How to lose on a sure-fire bet
There was a wonderful story in today's WSJ about how some big banks managed to lose some of their hard-earned TARP money.
May 26, 2009
House Prices Continue to Slide
House prices continued to tumble in March, according to the Case-Shiller index. Time to see what the futures say (keeping in mind the forecasting capacity of the Case Shiller futures are not well known).
May 12, 2009
Tracking the recession
Here are links to perspectives from others on where the economy stands at the moment.
April 12, 2009
Why sell crack when taking money from a careless lender is so much easier and more profitable?
March 25, 2009
Is the worst behind us?
A couple of weeks ago we received the encouraging news that retail sales for both January and February were 1.8% above December. On Monday the National Association of Realtors reported that February sales of existing homes were 5.1% above January levels on a seasonally adjusted basis. Today the Census Bureau reported that new orders for manufactured durable goods rose 3.4% in February, with new orders for nondefense capital goods up 7.4%. And also today the Census Bureau reported that new home sales in February were up 4.7% (on a seasonally adjusted basis) relative to January. Is the tide starting to turn?
March 15, 2009
What will recovery look like?
When good news comes, what should we expect to see?
March 10, 2009
Moral hazard and AIG
We are now suffering the consequences of one of the most spectacular financial miscalculations in history, after investors around the world discovered that trillions of dollars invested in securities derived from U.S. home mortgages were far riskier than they had originally believed.
February 25, 2009
Not Nonsense (House Prices)
Remember this graph?
February 14, 2009
Former Bernanke home in foreclosure
A couple of stories that provide some personal perspective on the scope of the current problems.
February 08, 2009
Kash Mansori on a home purchase tax credit
We're pleased today to feature a guest contribution to Econbrowser from Kash Mansori, senior economist for Jefferson Wells International.
January 19, 2009
Is there a problem? And is there a solution? My answers: yes, and yes.
December 15, 2008
Finding the exit
How you think we might get out of our current economic problems has something to do with how you think we got into them in the first place.
October 15, 2008
Some encouraging developments
Plenty of gloom out there if you're hungry for more. But I wanted to pass along a couple of developments this week that give me some hope.
October 14, 2008
The global recession
IMF research economist Prakash Loungani reports some statistics on the extent to which housing price declines are being seen worldwide.
October 06, 2008
Roundtable discussion on the financial crisis
I participated on Friday with several other UCSD faculty members (including Nobel laureate Harry Markowitz) in a discussion about the current economic crisis. If you have RealPlayer, you can view the discussion here, though I recommend fast-forwarding to skip the first 8 introductory minutes to get to the actual discussion. If you just want my slides, I've posted them here.
September 22, 2008
Housing Prices: How Far to Go until Bottom?
I'll just take the market's view here; using the futures prices from the CME (via ino.com), prices will fall about another 16% from June (or 17% in log terms):
Brad DeLong on Bernanke and Paulson
Brad DeLong had some insightful and amusing observations on the priorities of Federal Reserve Chair Ben Bernanke and Treasury Secretary Henry Paulson. I can't resist reproducing Brad's comments with some annotations of my own.
September 21, 2008
Let me begin with the point on which I am in complete agreement with Treasury Secretary Henry Paulson and Federal Reserve Chair Ben Bernanke-- it is hard to overstate just how scary this week's developments in financial markets could be.
August 06, 2008
Synergies of the unpleasant kind: recessions, credit crunches and housing busts
From the abstract of a new paper by Stijn Claessens, M. Ayhan Kose and Marco E. Terrones, entitled "What Happens During Recessions, Crunches and Busts?" (paper now online here):
We provide a comprehensive empirical characterization of the linkages between key macroeconomic and financial variables around business and financial cycles for 21 OECD countries over the 1960-2007 period. In particular, we analyze the implications of 122 recessions, 112 (28) credit contraction (crunch) episodes, 114 (28) episodes of house price declines (busts), 234 (58) episodes of equity price declines (busts) and their various overlaps in these countries over the sample period. We document a rich set of stylized facts about the behavior of key macroeconomic and financial variables during these various events. Our results indicate that interactions between macroeconomic and financial variables can play major roles in determining the severity and duration of a recession. In particular, we show that recessions associated with credit crunches and house price busts are deeper and last longer than other recessions are. In light of our findings, we examine the implications of recent macroeconomic and financial developments in the United States for the future path of its economy.
July 30, 2008
July 20, 2008
Quarter 2 may come out OK, but challenges remain
July 15, 2008
Did Fannie and Freddie cause the mortgage crisis?
Some thoughts about the role played by the GSEs in the run-up in mortgage debt and house prices.
July 13, 2008
The Fannie and Freddie assistance plan
I see much to like about this.
July 12, 2008
Fannie Mae and Freddie Mac
How did we get into this mess, and how do we get out of it?
July 07, 2008
Janet Yellen on risks and prospects for the U.S. economy
This morning we were pleased to welcome Janet Yellen, President of the Federal Reserve Bank of San Francisco, to our UCSD Economics Roundtable. She focused on three main challenges: the housing slump, financial market turmoil, and commodity prices, which she likened to the three witches from Macbeth. Her complete speech is available from the FRB SFO Here are some excerpts.
July 03, 2008
Links for July 3
Today we outsource with some interesting links on oil markets and housing.
June 28, 2008
As noted by Calculated Risk, global warming or no, the spring selling season for new homes never seemed to arrive this year.
June 11, 2008
Housing and the oil shock
The housing downturn and rising gasoline prices are each exerting a significant contractionary influence on U.S. GDP. There is also an interactive effect between the two.
May 27, 2008
House prices and inventory
More outstanding analysis from Calculated Risk.
May 02, 2008
Fast and Easy Fannie
The Wall Street Journal had a very disturbing story on Wednesday about the "Fast and Easy" loan program of Countrywide Financial Corporation, many of whose mortgages were bought up by Fannie Mae.
April 26, 2008
Peter Hooper on the economic outlook
The speaker at our UCSD Economics Roundtable this week was Peter Hooper, chief economist for Deutsche Bank Securities. Here is a brief summary of his thoughts about the U.S. economic outlook.
April 09, 2008
March 31, 2008
Maybe not so nonsensical after all
How far will house prices fall? Implications from the latest WSJ survey.
March 11, 2008
Asking too much of monetary policy
I remember a Federal Reserve economist once recounting a conversation with his young daughter, who asked him, "What do you do at work, Daddy?" He answered, "I help make important decisions." "What kind of decisions, Daddy?" "Oh, things like how much money the government needs to print."
February 26, 2008
House prices falling and worries rising
Today we received updates on U.S. house prices from two different sources. The OFHEO national house price index recorded a 1.3% decline in the price of a typical U.S. home during the fourth quarter of 2007, while the S&P/Case-Shiller home price index registered a 5.7% decline during the last three months of 2007. Here in San Diego, the respective numbers showed a 2.6% decline according to OFHEO and 9.1% decline from Case-Shiller during the quarter. For the year as a whole, Case-Shiller calculates that home prices fell 9.8% nationally and 15% locally.
February 14, 2008
Tracking home prices in San Diego
Earlier this week, I explained why real estate prices, rather than interest rates or credit workouts, are the critical determinant of how bad the foreclosure problem is going to become. Today I discuss some of the alternative measures of real estate prices that we might look at, illustrated using the latest numbers for my own community here in San Diego.
February 12, 2008
Why "Project Lifeline" is unlikely to help the mortgage mess.
February 08, 2008
Just an anecdote, but an interesting one.
February 01, 2008
A "San Diego-style" recession
Alan Gin is an economics professor at the University of San Diego (a separate institution from the University of California at San Diego, where I teach). His San Diego index of leading economic indicators is sending a pretty strong negative signal.
January 30, 2008
Fed rate cut
Today the Federal Reserve announced a further 50-basis-point cut in its target for the fed funds interest rate, bringing it down to 3.0% for a total reduction in January of 125 basis points. How long should it take before this has an effect on the economy?
January 15, 2008
December retail sales
Disappointing yes, but the financial press is getting a little carried away.
January 13, 2008
How low will Ben go?
Was 25, now we have 50. Do I hear 75?
January 11, 2008
I thought it might be helpful to summarize some of the background on how we got into our present mortgage mess.
December 30, 2007
Home sales and prices continue to fall
2007 ended like it began, only worse.
December 08, 2007
More on the new mortgage plan
While the plan may not be as big a deal as we thought, the problem still is.
December 07, 2007
Some questions about the new mortgage plan
Part of this plan sounds like an unambiguously good idea. But most of the coverage I've seen is ignoring what should be the key questions.
November 21, 2007
Freddie Mac and Fannie Mae back in the news
So how worried should you be?
November 13, 2007
New research on the causes of the housing boom and bust
What are the respective contributions of national and local factors to recent changes in house prices?
October 21, 2007
Distressing Picture of the Day
From the IMF's September Global Financial Stability Report:
October 17, 2007
Deteriorating lending standards
What is the significance of the fact that the most recently issued subprime mortgages are the ones that are running into the biggest problems?
October 01, 2007
Pick a finger
Princeton Professor Alan Blinder offers his thoughts in the New York Times on who's to blame for the mortgage mess, getting the attention of Mark Thoma, Dave Iverson, Brad DeLong, and Greg Mankiw. Here are my two cents.
September 27, 2007
Yes, housing can go down even more
Today's Census Bureau report on the number of new homes sold in August provides our first clear data for the impact on the housing market of the financial turmoil that began August 9. It is not a pretty sight.
September 25, 2007
More troubles for housing
New data released today portend continued weakness for housing.
September 10, 2007
By how much will the Fed cut rates?
Once again we're seeing a big divergence between what the markets expect the Fed to do and what the Fed expects the Fed to do.
September 04, 2007
Another suggestion for the GSEs
George Washington University Professor Richard Green has another suggestion for addressing the market distortions generated by Freddie Mac and Fannie Mae that I mentioned in my comments at Jackson Hole.
September 02, 2007
The Taylor Rule and the housing boom
Stanford Professor John Taylor presented another very interesting paper at the Jackson Fed conference.
September 01, 2007
Comments on Housing and the Monetary Transmission Mechanism
Here are the comments that I delivered this morning at the Fed Jackson Hole conference.
Bernanke and Gramlich on the subprime issue
Also featured yesterday at the Federal Reserve conference in Jackson Hole were speeches by Fed Chair Ben Bernanke and former Fed Governor Edward Gramlich.
August 31, 2007
Report from Jackson Hole
Here are some brief impressions about this morning's papers at the Federal Reserve conference.
August 28, 2007
Solutions to the mortgage problem
Quick links to a few of the suggestions out there on what to do about pending mortgage defaults.
August 24, 2007
Latest economic indicators
July 26, 2007
No, this was not a good housing report.
July 19, 2007
Bernanke on the economic outlook
In testimony before the U.S. Congress yesterday, Fed Chair Ben Bernanke continued his policy of greater openness and transparency for Federal Reserve policy, trying to lay out clearly what the Fed is most worried about.
July 08, 2007
The Compleat UberNerd
An UberNerd, Tanta tells us, is
someone who is compelled to understand how things work in grim detail, even if the things in question are tedious in the extreme, like mortgage insurance policies.
A Compleat UberNerd is then
Someone who has read all these posts already and quotes them at tailgate parties.
She kindly provides all the links necessary to become the Compleat UberNerd over at Calculated Risk.
June 29, 2007
CDOs: what's the big deal?
Here are my two cents on concerns about possible systemic financial problems.
June 27, 2007
Housing's struggle continues
As expected, those very robust new home sales numbers initially reported for April turned out to be too good to be true.
June 22, 2007
Econoblog on interest rates
I was pleased to participate in the latest Wall Street Journal Econoblog with Mark Zandi, Chief Economist and co-founder of Moody's Economy.com. Here's a brief preview of what you can find over at the WSJ.
June 20, 2007
Slipping a little
I wouldn't read too much into the new starts, permits, and sentiment data, but I don't take them as very encouraging.
June 17, 2007
More on those rising interest rates
Rising rates look scary, but I still read it as good news.
June 03, 2007
Diverging Trends in Recent Employment Measures
Little noted is the fact that, while May's payroll employment release surprised on the upside, the household series were providing conflicting indications.
May 26, 2007
Not dead yet
We're still not seeing the deterioration in economic conditions that some had been expecting.
May 19, 2007
Bernanke on subprime mortgages
If Bernanke isn't worried about subprime mortgages, should you be?
May 17, 2007
Follow up on Housing Permits and Housing Starts: Do Permits "Predict"
In an earlier post on investment, I made the assertion that housing permits led housing starts. This assertion was contested by a number of observers (GWG, rana, spencer, CalculatedRisk). I've decided to revisit this question, since clearly, the best characterization of the stylized facts takes on heightened importance given the yesterday's release, as discussed by Bloomberg:
May 09, 2007
Why hasn't construction employment plunged?
We're well into a severe housing downturn by every measure except for the number of people working in residential construction.
April 25, 2007
Current economic conditions improve
Let's admit it-- the other shoe is not yet dropping.
April 09, 2007
More on Freddie Mac and Fannie Mae
More data, that is, and more questions.
April 02, 2007
The Subprime collapse and the housing market: a bubble or "looting"
Jim Hamilton's recent post "Bubble, bubble, toil, and trouble" elicited a tremendous amount of commentary -- and incredulity -- amongst the readers.
March 27, 2007
New and existing home sales
March 23, 2007
Bubble, bubble, toil, and trouble
It didn't look to me like a bubble on the way up, and it doesn't look to me like a bubble on the way down.
March 13, 2007
New Century Financial Corporation, formerly one of the nation's biggest subprime mortgage lenders, has had a spectacular trip up and even more spectacular trip down.
March 11, 2007
Fannie, Freddie, and Ben
February 28, 2007
Recent data leave me significantly more bearish than I was a month ago.
January 27, 2007
The housing market and the Federal Reserve
More evidence that the housing market has stabilized, consistent with the recent policy stance of the Federal Reserve.
January 16, 2007
Housing market review
Our local newspaper, the San Diego Union Tribune, has a big article this morning on the housing market. Among other things, this features some thoughts from yours truly and a foray into multimedia publishing.
December 27, 2006
Encouraging numbers for new home sales
The Census Bureau today reported that new home sales were 3.4% higher in November relative to October, on a seasonally adjusted basis.
December 19, 2006
Glimmers of hope in new housing numbers
November 30, 2006
Home sales down further
Data on October new home sales released yesterday by the Census Bureau suggest that I may be proved to have been wrong in thinking that new home sales had already hit bottom.
November 26, 2006
Housing: speculative bubble or fundamentals?
Caclulated Risk had some interesting observations this week about why forecasts for housing differ so widely across analysts.
November 25, 2006
Will the Dollar Plunge? Would that Be So Bad?
Yesterday's dollar plunge unnerved markets. What's the likelihood of a sustained, drastic decline?
November 17, 2006
Housing stats look bad
Much worse numbers for housing than I was expecting were announced today by the Census Bureau.
November 08, 2006
Mortgage rates and new home sales
This is the third of three posts based on my new research paper titled Daily Monetary Policy Shocks and the Delayed Response of New Home Sales, in which I describe the delays between Fed policy actions and what happens in the housing market.
November 07, 2006
How Big Is the Housing Overhang?
There's a lot of evidence of a rising inventory of unsold housing, and a big decline in housing sales. Can a more quantitative, stock-based figure be obtained?
November 02, 2006
Federal Reserve policy and mortgage rates
I've recently completed writing a research paper titled Daily Monetary Policy Shocks and the Delayed Response of New Home Sales. The paper develops some new measures of the delay between changes in Fed policy and the impact on the economy. In this, the second of three posts on the paper, I describe the paper's findings about how the Federal Reserve affects mortgage lending rates.
October 30, 2006
Skepticism about the Business Fixed Investment Handoff
One view of how GDP growth can be sustained in the wake of negative residential investment growth is to assert that business fixed investment picks up the slack. If this happens, then the adjustment of construction employment need not be too abrupt.
October 27, 2006
Interpreting median house prices
"Home Prices Plunge by Most in 35 Years", declare the headlines. But those numbers don't mean what you might think.
October 26, 2006
More evidence that housing may be stabilizing
Data on new home sales and inventories released today from the Census Bureau continue to support the view that the market downturn may have reached its bottom.
October 19, 2006
One way or the other
Mixed signals this week leave Bernanke still needing to earn his pay.
October 03, 2006
And they all lived happily ever after
Can high-flying stocks be reconciled with an inverted yield curve? David Rosenberg of Merrill Lynch, via Felix Salmon and Business Week thinks "it is highly doubtful that both asset classes can be getting the story right." But here's one scenario under which both markets in fact might be telling the same story.
October 02, 2006
Pending home sales up
The National Association of Realtors released favorable news today on pending home sales.
September 27, 2006
Seasonals in new home sales
New home sales could be worse. But don't overlook the seasonals and the fundamentals.
September 20, 2006
Watching housing slide
The Census Bureau yesterday released August data for housing permits and new housing starts, both of which confirm that we are in the midst of a significant housing downturn.
September 05, 2006
House prices still climbing
The Office of Federal Housing Enterprise Oversight (OFHEO) today released its house price indexes for 2006:Q2, which continue to show house prices climbing in all but five states, though with a significantly slower rate of increase than previously.
August 26, 2006
More thoughts on the housing slowdown
How concerned should we be?
August 24, 2006
New home sales continue to fall
No question about it, the housing downturn is here now, and it's big.
July 27, 2006
Seasonal adjustment and new home sales
How significant is the housing slowdown? Answering requires separating the seasonal from the cyclical factors.
June 30, 2006
All eyes on housing
Mark Thoma notes that the most recent FOMC statement has changed from declaring growth is "likely to moderate" to "Recent indicators suggest that economic growth is moderating". The first stages of the long-anticipated cooling of the housing market certainly appear to be here now.
June 06, 2006
Bernanke tells it like it is
Once again I recommend the most recent statement of our Federal Reserve Chair as some of the finest economic analysis you will find anywhere.
June 03, 2006
Indications of slower growth
This week's data paint a picture of slowing growth.
April 24, 2006
Who's afraid of $3 gasoline?
Does the expected strong 2006:Q1 GDP report mean that the economy will shrug off the recent resurgence of gas prices?
September 25, 2005
Responding to supply shocks
It seems pretty clear to me that a monetary contraction isn't the appropriate policy response to a supply shock. Apparently there are those within the Federal Reserve who see things differently.
July 18, 2005
Fact-checking the fact-checkers
When Chairman Ben Bernanke of the Council of Economic Advisors made a statement about the U.S. housing market last week, some analysts jumped all over him. It looks to me like Bernanke had his facts exactly right.
June 23, 2005
What is a bubble and is this one now?
Many of those discussing the possibility of a housing market bubble seem to be taking Justice Potter Stewart's position on pornography-- they haven't defined a bubble, but they think they know it when they see it. Maybe it's useful to take a look at a formal characterization of the concept of a speculative bubble, and see how well it seems to fit the facts of the current situation.
June 21, 2005
For the love of tulips
Many folks appear to be convinced that the current housing situation is akin to any of a number of other famous financial bubbles of history. Trouble is, those famous bubbles weren't very much like what most people seem to assume.
June 18, 2005
Babble about a housing bubble
There's been much discussion recently of whether the U.S. is experiencing a speculative bubble in house prices. Like previous historical bubble sightings, this one only seems to pop up in situations where the fundamentals on their own might justify significant price increases.