**The PRESS has been
highlighting housing during this recovery.....read to bottom chart
Tale of 2 realities
Purchases of new U.S. homes unexpectedly decreased in December, a blemish
as the industry wrapped up its best year since 2009 to emerge as a bright spot
for the economy.
The 7.3 percent drop in December sales to a 369,000 annual pace
followed the prior month’s 398,000 rate that was faster than previously
estimated, Commerce Department figures showed today in Washington. Builders
sold 367,000 homes in 2012, the most in three years and the first annual
increase in seven.
Construction of new properties rose last month to a 954,000
annual rate, the fastest pace since June 2008, according to Jan. 17 Commerce
Department figures. Photographer: David Paul Morris/Bloomberg
Jan. 24
(Bloomberg) -- Robert Shiller, a professor at Yale University and co-creator of
the S&P/Case-Shiller index of property values, talks about the global
economy and the U.S. housing market. He speaks with Tom Keene on Bloomberg
Television's "Surveillance" on the sidelines of the World Economic
Forum in Davos, Switzerland. (Source: Bloomberg)|
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“2013 will
show more of an increase in prices and more positive sales activity and housing
starts,” said Anika Khan,
a senior economist at Wells Fargo
Securities LLC in Charlotte,
North Carolina, a unit of
the biggest U.S. mortgage lender. “We expect to see residential investment
adding to growth despite a very sluggish overall pace of economic growth.”
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Debt Burden at ’80s Level May Aid U.S. Economy.
Consumers have reduced their debt burdens enough to be able to withstand higher taxes and help sustain the U.S. economy’s expansion, according to Pavilion Global Markets Ltd. strategists.
As the CHART OF THE DAY shows, mortgage and consumer-loan payments amount to the smallest percentage of after-tax income since 1983, according to quarterly statistics compiled by the Federal Reserve.
The debt-service ratio was 10.6 percent of disposable income in last year’s third quarter. Five years earlier, the figure peaked at 14.1 percent. Pavilion highlighted the drop yesterday in a report with a similar chart.
Household spending is poised to “strongly contribute to growth” this quarter and next, Pierre Lapointe, head of global strategy and research at the Montreal-based firm, and two of his colleagues wrote. Consumers account for about 70 percent of the economy, according to Commerce Department data.
Other indicators besides debt-service expense bode well for consumers, they wrote. The report cited a rebound in the housing market, the end of a decline in inflation-adjusted wages, and a slowdown in debt reduction.
Taken together, they will outweigh the economic effect of ending a temporary two-percentage-point cut in the payroll tax and possible automatic reductions in federal spending this year, the report said.
Searching for a black cloud. To do anything else is to admit being wrong.
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