Ben Walsh

from Data Dive:

The US housing market in charts: Case-Shiller and home permits

Ben Walsh
Nov 26, 2013 15:36 UTC

US home prices rose 0.7% in September and are up 13.3% over the same period last year, according to new data from the S&P Case-Shiller index. The index, which measures single-family home prices in twenty metro areas, showed the highest year-over-year gain since February 2006, Reuters reports.

Reuters breaks down the gains by metro area. Las Vegas leads the way with a remarkable 29% jump over last year:

Here's Case-Shiller's longer-term view of US housing prices, charting the index back to 1988:

Also this morning, new data from the Commerce Department showed October US housing permits rose 6.2% above September's level, and 13.9% year-over-year.

Calculated Risk's Bill McBride looks at total and single unit permits since 1960 and sees a "huge collapse following the housing bubble", followed by a general increase "after moving sideways for about two years and a half years". Here's his chart:

from Data Dive:

Four charts from the most important jobs report you aren’t following

Ben Walsh
Nov 22, 2013 22:25 UTC

The most important jobs report you've probably never heard of was released this morning by the BLS. The "Job Openings and Labor Turnover Survey" demands your attention if only for its acronym, JOLTS. Janet Yellen pays close attention to it, and with good reason.

The survey tracks the number of job openings and hires in the US, which are fairly obvious indicators of the strength of the labor market. It also tracks an important, if slightly more subtle, indicator: turnover. The BLS calls these "separations," and the number measures people who've quit jobs, been laid of, or otherwise left involuntarily.

The JOLTS numbers released this morning showed "3.9 million job openings on the last business day of September, little changed from August", and the hiring and separations rates were essentially unchanged as well. More people getting laid off is bad news, of course, but more people quitting their jobs is actually a very good sign. People tend to quit their jobs when they feel more economically secure or positive about the job market.

from Data Dive:

Fewer Americans are getting laid off, but not enough are getting hired

Ben Walsh
Nov 21, 2013 15:25 UTC

The number of Americans filing new claims for unemployment benefits is at a two-month low, data released by the Labor Department this morning shows.  From the report:

In the week ending November 16, the advance figure for seasonally adjusted initial claims was 323,000, a decrease of 21,000 from the previous week's revised figure of 344,000. The 4-week moving average was 338,500, a decrease of 6,750 from the previous week's revised average of 345,250.

Reuters writes that the new data suggests "some strengthening of labor market conditions". However, "while layoffs have slowed significantly to normal levels, there has not been a rapid acceleration in hiring as domestic demand remains lukewarm".

from Counterparties:

Summers goes negative

Ben Walsh
Nov 18, 2013 23:15 UTC

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In a new speech at the IMF Economic Forum, Larry Summers said the US may be in a near-permanent slump -- an assertion Peter Coy calls “deeply pessimistic”. What the US faces, Summers warns, is secular stagnation. The problem: nominal interest rates can’t go any lower, because they’re already near the zero lower bound, but the economy may need real interest rates of negative two or three percent to get back to full employment. Here’s Summers:

We may well need, in the years ahead, to think about how we manage an economy in which the zero nominal interest rate is a chronic and systemic inhibitor of economic activity, holding our economies back, below their potential.

from Data Dive:

China’s one-child policy in charts

Ben Walsh
Nov 18, 2013 17:11 UTC

On Friday, China announced its intention to relax its one-child policy, after more than 30 years. Reuters' Sui-Lee Wee and Li Hui report that the shift has been under consideration for the last five years. The complex set of family planning policies, they write, are "now regarded by many experts as outdated and harmful to the economy", due in part to an aging population.

Here's a Reuters chart showing China's dependency ratio, which compares the number of China's young and old citizens (its dependents) to the size of its working age population. A higher number means fewer working-age adults to support the young and the old.


You can also see above how big a social and economic trend urbanization has been over the last 40 years. Labor shortages have recently become a concern for Chinese leaders. It's important to note that the one-child policy change will be gradual, and that any increase in birthrates in the next few years won't lead to an increase in working age adults for at least a decade and a half.

Do stocks really trade for fractions of a penny? Sort of

Ben Walsh
Nov 18, 2013 14:54 UTC

When Nick Lemann’s New Yorker profile of SEC chair Mary Jo White came out, Felix took issue with this assertion:

In 2000, the S.E.C. permitted stocks to be traded in pennies or fractions of pennies, rather than the customary eighths or thirty-seconds of a dollar. That made it easier for traders to make money by placing very large orders for very small variances in the price of a stock.

Decimalization, Felix said, meant stocks traded in penny increments, not fractions of pennies.

from Data Dive:

America’s problem with productivity — and wages

Ben Walsh
Nov 15, 2013 18:58 UTC

Yesterday, the Bureau of Labor Statistics Released third quarter productivity and labor costs data. Non-farm worker productivity grew at an annual rate of 1.9% versus a 1.8% increase in the previous quarter, while non-farm labor costs fell at an annual rate of 0.6%. In other words, workers aren't getting much more productive, and, by one measure, wages aren't really increasing either.

First, here's the BLS's chart of the productivity numbers:

Notice that the red line, which is the change in productivity growth from the previous year, is flat. In other words, compared to the third quarter of 2012, Americans haven't gotten any more productive. A 1.8% increase in output, says the BLS, was offset by a 1.8% increase in hours worked.

Reuters' charts the relationship between increases in productivity, labor costs, and GDP growth:

Ken Griffin wants to break up the big banks, or run one

Ben Walsh
Nov 14, 2013 16:47 UTC

Ken Griffin, who runs the $14 billion hedge fund Citadel, said Tuesday that he wants to break up banks:

“We don’t have a good legal justification for breaking up the banking system. But if I could wave a magic wand, I’d break up the banking system.”

Asked whether the big banks had gotten too big to fail, or too big to manage, Mr. Griffin said, “They’re both.” When asked about how he’d break up some of Wall Street’s largest institutions, Griffin suggested pulling the securities businesses out of the banking system.

from Counterparties:

Payment plans

Ben Walsh
Nov 12, 2013 23:08 UTC

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The world of payments constitutes a big, profitable, sometimes less than competitive industry that has attracted a long list of well-funded startups.

Square, a company whose card reader plugs directly into mobile phones, has talked to Goldman Sachs and Morgan Stanley about going public next year, the WSJ reports. The company has annual net revenues of an estimated $110 million to $165 million, and expects to process $30 billion in purchases next year. That’s a big number in comparison to the $90 billion that mobile payments are expected to reach in 2017, but it’s minuscule compared to the volume MasterCard and Visa do annually: those two companies, which dominate the credit card market, together handle more than $5 trillion in purchases each year.

from Counterparties:

We didn’t build that

Ben Walsh
Nov 6, 2013 23:03 UTC

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The US government isn’t just cutting spending, Matthew O’Brien writes, it’s cutting the best kind of spending: particularly in “things like infrastructure, schools, and scientific research. The kind of things the economy needs to grow, but the private sector won't invest enough in”. The FT’s Robin Harding, Richard McGregor, and Gabriel Muller chart the fall in US public investment, showing that it has reached “its lowest level since demobilisation after the second world war”.

Earlier this year, the American Society of Civil Engineers gave the country’s infrastructure a grade of D+. As Ezra Klein and others have repeatedly pointed out for quite some time, this decline in public investment has come at precisely the time when the US government can essentially borrow for free.