The Monday Morning Quarterback: A quick analysis of important economic data released over the last week
Elliott D. Pollack and Co.
Arizona Snapshot:
Slow by Arizona standards, but, the state continues to do much better than the U.S. as a whole. Unemployment claims not showing great progress lately. Housing permits continue to be the big story in the state’s two major metro areas.
U.S. Snapshot:
More of the same. A slow but continuing expansion in economic activity. Leading indicators are up a little. Initial claims for unemployment insurance are still stuck in a rut and have shown no improvement over a year ago. Inflation is under control. New housing continues to recover from the huge decline it took from 2006 to 2011. In fact, it is the best news out there.
Arizona
Arizona weekly unemployment claims, while relatively flat over the last couple of months, are still 39.6% lower than a year ago. Compare this to 0% nationally and you can see how much better the state is doing than the country as a whole.
The best news, though, continues to come on the housing front. According to R.L. Brown, the 902 new home permits in January are 49.1% above the levels reached in Greater Phoenix a year ago. Also, new home median prices have increased to $253,000, a gain of over 18%. For comparison, resale prices are up almost a third. This is still very good news. The drop in existing home prices was much greater than the drop in new home prices simply because new home builders will not build to sell at a loss while existing homes, especially those purchased or refinanced between 2004 and 2010, have been sold at a loss.
The Greater Tucson market is also recovering, but not nearly at the pace of Greater Phoenix. Permits in January, while up almost 72%, equates to only 189 permits. Median new home prices are up a modest 4.7% over the past year while resale prices are up 15.0%.
National
The Conference Board Leading Economic Index (leading indicators) rose a modest 0.2% in January following a 0.5% gain in December and no change in November. This points to a slow but continued expansion in the near term. Credit use has picked up, driven by auto loans. Housing continues to push up the index and is now at about twice the level of the recessionary lows. Growth in new housing is expected to continue to help labor markets. The biggest risk is still federal spending.
Initial claims for unemployment insurance seem to be stuck in a rut and are now no better than they were a year ago. This is a dismal performance. The weak economy has allowed consumer prices to stay low. The consumer price index for all urban consumers now stands a modest 1.6% over a year ago. This is a good showing. The change over the last month was 0%. The index for all items less food and energy is up only 1.9% over the past year and 0.3% over the last month.
All of the good news is with housing. According to the National Association of Realtors, existing home sales edged up in January. Existing home sales are up 9.1% over a year ago. The median price, while down from last month, is up 12.3% over the last year. Gains in home prices are necessary for a more normal economy. As prices move up, fewer homeowners will be under water and will be more likely to be able to move. Also, the positive wealth effect of rising home prices will start to kick in. NAR also reports that buyer traffic is 40% higher than a year ago. Nationally, new home building permits are 29.2% above a year ago and new home starts are up 20.0%.
