April 17, 2012

Channeling Orwell: AP’s Kravitz Celebrates Allegedly Recovering Housing Market, Flushes Bad Starts Data Down Memory Hole

KoolaidAPhousingRecovery0412After reading Derek Kravitz’s final report of the day at 4:45 p.m. on the housing market at the Associated Press, aka the Administration’s Press, I just had to check the other wires to see if they were sipping from the same housing-market-in-recovery koolaid.

The answer is no. At Reuters, Jason Lange’s 3:22 p.m. dispatch reported that “Output at U.S. factories slipped in March and builders started construction on fewer homes, offering cautionary signals for an economy that appeared to be gaining traction.” At Bloomberg, Timothy R. Homan wrote: “While warmer weather may have spurred home construction at the beginning of 2012, a competing supply of cheap existing properties may be steering potential buyers away from purchasing a new home. That means home construction may not help boost the economy in 2012.” Both of these assessments make Kravitz’s take on housing, which included omitting very negative data on housing starts, seem that much more bizarre (my comments in italics follow each paragraph):

It’s been a long time since the market for new homes has looked this good.

The number of single-family homes under construction, a seasonally adjusted 241,000 in March, is barely higher than the all-time low of 235,000 set in October 2011, and didn’t get that low in 42 years of recordkeeping until July of last year.

Rising rents and a healthier job market are inspiring more people to consider buying.

Builders are responding to rising rents by building more multi-unit dwellings which are usually rental properties, not by building more single-family homes. Later in the report, Kravitz notes, as he has in three other reports since Sunday, that “Employers have added an average of 212,000 a month from January through March.” Trouble is (seasonally adjusted), employers in this “healthier job market” only added 120,000 of those jobs in March. The trend is stable at best if April turns around, and deteriorating at worst if it doesn’t.

Builders are responding to the demand by laying plans for more homes this year than at any other point in past 3 1/2 years.

“Building permits” don’t represent active “building.” Housing starts do (at least its initial phase), and they dropped significantly in March, by so much that they were, as Bloomberg noted, “less than the lowest estimate of economists surveyed by Bloomberg and the slowest since October.” Kravitz went from giving them equal time with permits in his opening report today, to downplaying their importance 90 minutes later, to not mentioning them at all in his final report.

And banks are helping both by approving more loans.

Kravitz clearly hasn’t learned what I’ve learned, which is that in many part of the country banks will not lend for spec home-building, even in parts of the country that are doing well. So it’s getting to the point where the only way a builder will start building a home is to have a buyer already lined up.

All that points to a better year for the housing market, though a full recovery could take several years.

Kravitz’s case is weak, and as noted, his optimism is not shared at Reuters or Bloomberg — or by yours truly.

A more complete analysis of today’s housing data release is at my home blog. You’ll learn a lot more there than you will in any of the reports Derek Kravitz submitted today — especially his final one, which puts his one-day performance on a par with Anne D’Innocenzio’s Orwellian whitewash several weeks ago of March’s Conference Board consumer confidence report (which went from “falls” to “dips slightly” to “roughly flat” to a “rosy outlook” in the course of a single business day).

Cross-posted at NewsBusters.org.

AP Downplays Bad News About Housing Starts and Removes It From Headline

AdministrationsPress1111The stunts the folks at the Associated Press, aka the Administration’s Press, continue pulling to downplay, minimize, or whitewash bad or embarrassing economic and other news shouldn’t surprise us any more. But they continue to disappoint nonetheless.

Last month, a consumer sentiment index reported by the Conference Board fell by a relatively modest amount. Headlines and descriptions at related AP reports went from “falls” to “dips slightly” to “roughly flat” to a “rosy outlook” in the course of a single day. Today’s AP rewrite only involved one step. At 9:04 a.m., Derek Kravitz’s dispatch on the Census Bureau’s New Home Construction report gave equal play to the seasonally adjusted (and totally unexpected) fall in new housing starts and the also unexpected but more modest rise in building permits:

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Fantasy (AP Sun. Report on ‘Housing Recovery’) Meets Reality (March Starts ‘Unexpectedly’ Weak)

DownGraphUnexpectedDerek Kravitz at the Associated Press, aka the Administration’s Press, must have doubled down on the energy drinks over the weekend. A Sunday morning report (HT to a NewsBusters tipster) telling readers that signs are “pointing to a long-awaited recovery” in the housing market went on, and on, and on, and on for over 1,350 words.

The factors the AP pair cited were primarily these: “Hiring has strengthened,” “Loans remain cheap,” “Homes are more affordable,” and “Americans are more confident.” They should have known that their first point has become questionable with March’s mediocre jobs report and the recent spike in weekly initial unemployment claims to 380,000 (which so happens to be above his colleague Christopher Rugaber’s already too-high benchmark for job-market improvement of 375,000), and that the last point should read: “Americans are less un-confident.” In terms of the new-home market, where much if not most of the GDP-generating action is (at least in normal times), yesterday’s builder sentiment index foreshadowed serious problems with their premise, while today’s “unexpected” data from the Census Bureau basically finished it off.

The sentiment index dropped from 28 to 25, compared to expectations of 29. The headline at Kravitz’s coverage yesterday (“US homebuilder outlook dips below 4-year high”) obscured the fact that the index dropped back to where it was in January. One would also think that a lot of builders who would have been index participants when it dropped into single digits in late 2008 and early 2009 have left the business, with the less pessimistic ones remaining.

Today’s New Residential Construction report from the Census Bureau, analyzed here at my home blog, was a big disappointment. Distilled into four bullet points and sticking with seasonally adjusted numbers, it told us that:

  • While permits are up, they are skewing towards multi-family dwellings.
  • Total housing starts fell, and came in 8% below January.
  • The virtually identical number of single-family starts in February (463,000) and March (462,000) were almost 9% below the virtually identical numbers for December (505,000) and January (509,000).
  • Completions and the number of units under construction came in near their historic lows.

Reuters and Bloomberg, employing the now infamous U-word (“unexpectedly”) recognized that today’s data stunk, especially the key data point, namely housing starts:

Bloomberg (“U.S. Housing Starts Unexpectedly Drop to Five-Month Low”)

Builders began work on fewer homes than forecast in March, signaling a sustained industry recovery will take time to get underway.

Housing starts dropped 5.8 percent to a 654,000 annual rate, less than the lowest estimate of economists surveyed by Bloomberg News and the least since October, Commerce Department figures showed today in Washington. The slump was led by the volatile multifamily category, which at the same time showed a jump in permits, a proxy for future construction.

Reuters (“March housing starts fall, new permits surge”) –

Groundbreaking on homes fell unexpectedly in March, but permits for future construction rose to their highest level in 3 1/2 years, Commerce Department data showed on Tuesday.

Housing starts slipped 5.8 percent to a seasonally adjusted annual rate of 654,000 units, the government said. February’s starts were revised down to a 694,000-unit pace from a previously reported 698,000 unit rate.

Economists polled by Reuters had forecast housing starts little changed at a 705,000-unit rate.

March’s decline in housing starts was the biggest percentage drop since April of last year, although most of the fall was in the volatile multi-unit category, which declined 16.9 percent.

Starts for single-family homes eased 0.2 percent.

And brightening the report’s message on the economy, new permits for home construction surged.

The problem with the “surge” in permits, something which I expect the establishment press not to investigate, is that builders may be stockpiling permits in advance of economic improvement they may believe is many months away, for reasons which should be obvious.

Anyway, Reuters and Bloomberg gave the housing starts element of the report an appropriate level of attention. So did the Associated Press — at first. Wait til you see what the AP and Kravitz did after that to dress up today’s pathetic numbers. That post will come later today.

Cross-posted at NewsBusters.org.

March 2012 Housing Starts, Permits, and Completions: Still Very Weak

Filed under: Economy,Taxes & Government — Tom @ 10:21 am

From the Census Bureau’s press release – Let’s first look at building permits:

Privately-owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 747,000. This is 4.5 percent (±1.1%) above the revised February rate of 715,000 and is 30.1 percent (±1.6%) above the March 2011 estimate of 574,000.

Single-family authorizations in March were at a rate of 462,000; this is 3.5 percent (±1.1%) below the revised February figure of 479,000. Authorizations of units in buildings with five units or more were at a rate of 262,000 in March.

The raw numbers: The Bureau’s initial estimate of total building permits actually issued in March is 67,200, which is the best March in four years. Trouble is, permits for single-family units were only 42,200, leading to the mediocre seasonally adjusted result the Bureau noted. That’s about 12% higher than a year ago, but 17% below 2010. Meanwhile, actual permits for five-plus unit buildings were 23,000 — the highest number in any month since August 2008.

Now, to housing starts:

Privately-owned housing starts in March were at a seasonally adjusted annual rate of 654,000. This is 5.8 percent (±15.6%)* below the revised February estimate of 694,000, but is 10.3 percent (±14.6%)* above the March 2011 rate of 593,000.

Single-family housing starts in March were at a rate of 462,000; this is 0.2 percent (±12.6%)* below the revised February figure of 463,000. The March rate for units in buildings with five units or more was 178,000.

The raw numbers are bad news:

  • Actual total starts in March were 54,500, about 10% higher than a year ago. The seasonally adjusted figures say that the March 2012 annual rate was about 4% higher than 2010. The raw numbers say that there were slightly fewer starts in 2012. When this happens, you believe the raw numbers.
  • Single family starts were actually 39,400. That’s 8.5% higher than a year ago, but 17% lower than two years ago.
  • Starts of five-plus unit building were 14,000, which greatly exceeded both 2011 and 2010.

Finally (in terms of the press release), completions:

Privately-owned housing completions in March were at a seasonally adjusted annual rate of 600,000. This is 4.2 percent (±13.5%)* above the revised February estimate of 576,000 and is 0.5 percent (±15.3%)* above the March 2011 rate of 597,000.

Single-family housing completions in March were at a rate of 440,000; this is 1.4 percent (±12.5%)* above the revised February rate of 434,000. The March rate for units in buildings with five units or more was 146,000.

The raw numbers were 45,400 in total (again, above last year but below two years ago), 34,000 for single-family (ditto on the comparisons to previous years), and 10,500 for five-plus unit buildings (the rest of the total is for 2-4 unit buildings).

The press release doesn’t address the under-construction numbers, which are as follows:

  • Total — 438,700 raw; 447,000 seasonally adjusted (above last year but way below two years ago)
  • Single-Family — 233,600 raw; 241,000 seasonally adjusted (both are worse than March 2011, and barely above all-time lows seen during the past several months)
  • Five-plus units — 194,400 raw; 195,000 seasonally adjusted (both figures are much higher than last year).

The numbers show a stagnant single-family new-home market which is still scraping along the bottom, and a multi-unit market which is growing at a decent rate but still far from where it was in the pre-Obama era.

Latest PJ Media Column (‘Tax (Disappearing) Freedom Day’) Is Up

Filed under: Economy,Taxes & Government — Tom @ 8:47 am

It’s here.

It will go up here at BizzyBlog on Thursday (link won’t work until then) after the blackout expires.

“Tax Freedom Day®” per the Tax Foundation is today, and arrives at about noon.

As noted at the column, “Government Spending Freedom Day” (my term), which incorporates the full effect of the estimated federal government deficit of $1.2 trillion, is May 19.

“We Finally Have Our Lives Back Day” (also my term), which takes into account the roughly $2 trillion annually in direct and indirect costs of federal, state, and local regulations, will arrive on about July 11.

The sum of Tax Freedom Day’s 107 days plus the 53 days cited in the column for regulatory busywork and compliance is 160 day. If you spend almost half of your time either working for the government or complying with its wishes, is it still fair to say that we are a free people?

The 32 days relating to the deficit are days we’re forcing future generations, including those which haven’t yet entered this world, to work to pay for our current government’s excesses. Obviously, we don’t have their permission. It’s one thing to push a few days on them in the name of making or preserving a better world (e.g., productive research, necessary and justifiable wars). It’s quite another to push over one month per year on them for the past four years (including fiscal 2012) just to fund a bloated government’s routine functions.

To the extent that it’s expressed at all, the outrage is insufficient.

Tuesday Off-Topic (Moderated) Open Thread (041712)

Filed under: Lucid Links — Tom @ 7:00 am

Rules are here. Possible comment fodder may follow later. Other topics are also fair game.

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Positivity: Pope Benedict stars in new children’s book

Filed under: Positivity — Tom @ 5:57 am

From Vatican City:

Apr 15, 2012 / 04:08 pm

Natalia Tsarkova, known as the “Michelangelo of the 21st century” for her work as the official papal portrait artist, gave Pope Benedict a special gift for his 85th birthday: a copy of her new children’s book in which he is the star.

Tsarkova presented her book, titled “The Mystery of a Small Pond,” to the Pope ahead of time – his birthday is April 16 – during a private audience at his summer residence of Castel Gandolfo.

The two main characters in the literary work of art are Pope Benedict and a small red fish.

In an interview with CNA, Tsarkova said she came up with the story one afternoon while strolling through the gardens at Castel Gandolfo.

“While waiting in the fantastic and such spiritual atmosphere of the gardens, I got the idea to write a book and give it to the Holy Father for his 85th birthday,” she said.

“It was like an inspiration that came from my heart. I had no trouble writing it because it came to me in a very spiritual way.”

Tsarkova was born in Russia, was one of the most successful students at the Moscow Academy of Arts and is known for her portraits of numerous celebrities.

A devout Orthodox Christian, she came to Rome more than twelve years ago. Although she planned to stay just a few months, her life changed forever in 2000 when she was asked to paint a portrait of Blessed John Paul II to mark his 80th birthday.

She said it took her two years to write “The Mystery of a Small Pond,” in which she attempts to convey the love Benedict XVI has for nature. …

Go here for the rest of the story.