Friday Economic Snapshot: Another round of brinkmanship
Welcome to the end of a tumultuous week. As world leaders gathered in New York, peace seemed possible between Iran and the United States and the world watched as a horrible terrorist attack was carried out in Nairobi, Kenya. Less serious and less honorable, political factions within the United States appear poised to shut down the federal government within a week or so.
With that dramatic backdrop, we’ve also seen some economic data come across the wire that’s generally positive. We’ve heard this one before: our delicate, somewhat wimpy economic recovery looks stronger by the month, but Congress stands ready to derail the train. This is what we’ve sent our representatives to do in Washington on our behalf, right?
Let’s dive in, and hopefully find some positive news to help us block out the noise.
Home Sales/Mortgage Delinquency
Beginning with home sales, there’s new data to digest. Zillow reported that it expects the Case-Shiller House Price Index to end up showing a 12.4 percent year-over-year increase in prices nationwide for August. The data from both outfits is showing a slowing in month-over-month home values, which is probably healthy at this point, as many have expressed fears we’re cruising for another housing bubble. Bolstering this thought, the National Association of Realtors reported that its pending home sales index decreased 1.6 percent in August, but remains 5.8 percent above August 2012.
Another sign of a stabilizing, still improving housing market, Lender Processing Services is expected to report that the number of delinquent home loans declined from July to August, and dropped approximately 10 percent compared with August 2012. Less delinquent mortgages mean healthier consumers, which should result in increased consumption and optimism in the economy’s health. Department stores are already rolling out the Christmas gear, so this is good news at a good time.
Is Obamacare the hostage or is the full faith and credit of the United States? Numerous polls show a shutdown of the government over either is unwanted, yet it’s clear battle lines are being drawn over whether to pay for the spending the government has already committed to. It doesn’t make much sense, we’ve all been down this road before and it’s hard to get too excited by the boy who cries wolf. That said, closing government institutions and parks would put many people temporarily out of work and negatively impact consumer sentiment for all consumers, workers and business owners.
Direr still is the concern that the country may default on its loans, in which case all bets are off and we slip into the unknown. Again, you’ve heard it before, so let’s hope for a last minute, kick-the-can solution. This, sad to say, is our best-case scenario right now.
OK, that was unpleasant. Let’s turn our attention to something more positive: the latest Department of Labor numbers showing seasonally adjusted unemployment claims down to 305,000, a dip of 5,000 from the previous week. This puts the 4-week moving average at 308,000, a decrease of 7,000 from the previous week’s average of 315,000.
It sure doesn’t feel like real recovery to many, however these numbers are very low. We haven’t been at this point since 2007. Going back to the early 1970s, we’ve previously seen unemployment claims this numerically low in the late 1990s, mid- to late-1980s and mid 70s. This doesn’t mean we’re out of the woods by any stretch, as job creation continues to lag. It’s something, though.
Just like the shepherd boy tricking neighboring villagers, the hysterics out of our government have failed to cause the panic they did back in previous years. Still, the global economy hangs in the balance whenever it’s threatened that we’ll stop paying our debts.
We’re on the verge of a potentially historic international peace agreement, our presence in Afghanistan continues winding down, the stock market has resisted freaking out over the coming debt ceiling debate and slowly, but surely, our economy continues to heal. There are even a few fledgling signs of economic growth in Europe. Those are plenty of reasons to kick back and enjoy your weekend — just keep your TV off C-SPAN.