We’re reliving the 1930’s – although it’s just not obvious to everyone. No, It’s not “stagflation.” There’s plenty of stag but no flation – in or de – apparent in the data. Financial rigor mortis.
Thursday’s Industrial Production and Capacity Utilization figures showed that the total index was up 3.5%.
Given this, and a money supply that is up 6.2% (M2, year on year) we know that there is still deflation around, but the lack of other (normal) sources of money creation (loan originations and rising velocity of money) has kept gold and silver from making major advanced.
This morning we have some new figures on housing to ponder, but again, nothing to write home about. Good, but still in catch-up mode.
BUILDING PERMITS
Privately-owned housing units authorized by building permits in April were at a seasonally adjusted annual rate of 1,080,000. This is
8.0 percent (±0.7%) above the revised March rate of 1,000,000 and is 3.8 percent (±0.9%) above the April 2013 estimate of
Single-family authorizations in April were at a rate of 602,000; this is 0.3 percent (±0.8%)* above the revised March figure of
600,000. Authorizations of units in buildings with five units or more were at a rate of 453,000 in April.HOUSING STARTS
Privately-owned housing starts in April were at a seasonally adjusted annual rate of 1,072,000. This is 13.2 percent (±13.6%)* above
the revised March estimate of 947,000 and is 26.4 percent (±11.8%) above the April 2013 rate of 848,000.
Single-family housing starts in April were at a rate of 649,000; this is 0.8 percent (±10.8%)* above the revised March figure of
644,000. The April rate for units in buildings with five units or more was 413,000.HOUSING COMPLETIONS
Privately-owned housing completions in April were at a seasonally adjusted annual rate of 847,000. This is 3.9 percent (±10.1%)*
below the revised March estimate of 881,000, but is 21.2 percent (±13.6%) above the April 2013 rate of 699,000.
And then, there is where America is in the economic long wave. Nearing a long term bottom in interest rates. Between now and 2020.
We already know from looking at a maximum zoom-out that 10-year Treasuries have been falling since 1982, or so. And this has fueled a rise in stock prices since lousy earnings don’t matter if everyone else has crappy real returns. Average thrives and CEO’s are cutting a fat hog on stock benefits they had nothing to do with. They largely have been lucky.
So, just how sick is this economy?
Well, you have to keep your comedy-writing mindset in place, notice that earnings and jobs are so tight in America right now that a headline mentioned how “Hospitals reach out to attract affluent immigrants: Hospitals compete for affluent immigrants with premium menus, revamped rooms, other extras.” Truly WTF running wild.
That’s almost like saying “Help the economy: Get sick.”
Ever read the Lincoln Star Journal? “Meat prices lead higher inflation” was their take on Consumer Prices. And we’re likely to keep heading down this road through 2015.
Driving it is the national drought. As you can see in this week’s National Drought Monitor.
Oh, sure, the drought continues in California which means higher veggie (and almond) prices.
But the biggest area hit now is turning to the Dust Bowl area of the New Mexico, Colorado, Texas, and Oklahoma.
A couple of months ago, I alerted you to my expectation that we would likely see human relocations beginning this year from California.
But maybe I’m wrong: So far, only cattle are migrating, along with truckloads of salmon.
What’s worse, when you read the local news out of the Bay Area, you’ll find the drought is being used to roll back protection for endangered species of salmon, and whatnot. Thanks to senatress Diane Feinstein.
To be sure, managing through times like this are difficult. But migration of humans and settling in other parts of the country makes sense. Yet, our real estate sources say people are still moving to the Bay Area is good numbers. Lemmings are alive!
And so it goes with humans in denial: You can read the numbers all day long to folks, yet few will take them seriously, let alone act on them. It’s a subtle difference, but the difference between survivors and victims.
While one of my consulting clients in the East Bay is still several weeks out on a drilling rig to punch in a water well on his (large) property, officials are already billing him for the increased valuation of his property if he gets his well in. Sending him forms of well equipment cost, you can almost see the tax slobber on the forms.