Discussing construction spending, manufacturing is humming right along, wage growth and a shifting workforce, rising rents and much more!
Construction Spending Increases
From the Census Bureau:
Construction spending during October 2017 was 1.4% above the revised September estimate. The October figure is 2.9% above the October 2016 estimate. During the first 10 months of this year, construction spending was 4.1% higher than the same period in 2016.
Spending on private construction was 0.6% above the revised September estimate. Residential construction was 0.4% above the revised September estimate.
While above the consensus estimates and it did increase, I must mention how we really really need more affordable homes…
ISM Manufacturing PMI Declined Slightly
ISM just reported that their November PMI® decreased 0.5 percentage points from the level in October. However, they also said that economic activity in the manufacturing sector expanded in November, and the overall economy grew for the 102nd consecutive month.
So that slight decrease doesn’t seem too bad…
What’s Going on with Wages?
From Strategy + Business:
We live in a superstar economy. Those who are really, extremely good at their jobs in rarefied domains — sports, acting, coding, social influencing, money management, running companies — get paid disproportionately well. For everybody else, however, wage growth in an age of technological change and sluggish economic expansion has been difficult to come by. It has come to be accepted as something like a natural law in the economy. And it all has to do with the way the vast global market rewards size, scale, and outlying performance in the 21st century.
Very interesting article. Sometimes when I hear how much some CEO, movie star or athlete makes, it makes me wonder if they truly deserve it.
And the sluggish wage growth for the majority has become an issue that is hurting the economy. This leads me to ask what is the best way to get more wage growth for the average person?
Peoples Bank to Pay $2.8 Million For Deceptive Mortgage Practices
From the Federal Reserve:
The Federal Reserve Board on Tuesday issued a Consent Order against Peoples Bank for deceptive residential mortgage origination practices in violation of section 5 of the Federal Trade Commission Act. Peoples told certain borrowers that they were paying an additional amount for discount points that would lower the borrowers’ interest rate. In fact, many borrowers did not receive a reduced rate. The Consent Order requires Peoples to pay approximately $2.8 million into an account to provide restitution to these borrowers.
Peoples Bank is getting out of the mortgage business. Maybe People Bank decided mortgages were not profitable if they have to do them in a legal and ethical way?
Firms in the Carolinas Reported Strong Business Conditions
From the latest Richmond Fed Carolinas Survey of Business Conditions:
Firms in the Carolinas reported improved business conditions in November. Reports indicated strong growth in sales, and firms remain confident, as they expected continued sales growth and improved business conditions six months from now.
Carolina firms also reported growth in employment and expected to see both employment and wages continue to rise. However, the indicator for the availability of needed skills remained negative but did increase to −2 in November from −9 in October.
Firms in the Carolinas saw continued price growth in November, as growth rates increased for both prices paid and prices received. Firms expected to see price growth continue, along with further increases in business expenditures in the coming months.
Sounds positive! Check out the charts:
The report sounded positive and the upturn in the business activity is encouraging. But the trend of decreases in the 3-month moving average for the expected business activity is not encouraging.
Loan Defect Risk Stabilizes Nationally
From Mark Fleming at First American:
The surge in defect, fraud and misrepresentation risk that started a year ago has finally lost momentum. Nationally, defect, fraud and misrepresentation risk has stabilized, but the local impact of recent natural disasters remains a concern.
The data seems to validate our belief that there is a correlation between natural disasters and rising loan application defect risk. Our defect, fraud and misrepresentation risk index shows the largest month-over-month increases in defect risk are in hurricane-impacted markets.
Interesting how natural disasters seem to lead to more problems with mortgages. First American reported that in their October 2017 Loan Application Defect Index that their Defect Index is up 22.1% compared to last October.
The good news is that their Defect Index is down 18.6% from the high point back in 2013. So while we may be seeing an increase due to the recent hurricanes, we have improved considerably in the long run.
How the Workforce Changed Since the Great Recession Began
From Pew Research Center:
Ten years ago, as Americans prepared for the winter holidays, few suspected that the U.S. economy was about to enter one of its steepest downturns in living memory. The Great Recession, as it came to be known, began in December 2007 and worsened considerably with the 2008 global financial crisis. Although people’s perceptions of their local job market have improved considerably in recent years, in many ways the U.S. labor force looks very different than it did at the beginning of the recession.
They go on to describe how the fewer people are in the labor force, the workforce is getting more diverse, workers are older, the unemployed are staying unemployed for longer and we are seeing more jobs in the service sector.
They said that the jobs that require higher social skills, analytical savvy and technical prowess are seeing the most growth. Something to consider if you want to stay competitive in the workforce of be better prepared to find another job.
Consider this quote from Brookings:
In our view, following the insights of the MIT economist David Autor and others, the increasing adoption of computer technology has led in recent decades to rapid employment growth at the upper and lower ends of the skill distribution, combined with extremely sluggish growth in the middle of the continuum. For example, job creation has been relatively robust since 2010 for both highly digital computer-mathematical and business-finance occupational groups, as well as in low-digital occupational fields such as healthcare support and food preparation. By contrast, mid-digital occupational groups like office administration and sales have seen much slower job growth.
Of course, you need to also consider that the very nature of work and society are changing rapidly. AI and technology such as self driving cars could make a dramatic impact.
We may be doomed to live in very interesting times…
Surprise! Rents Still Growing Like Crazy!
Overall, the national one bedroom median rent grew 4.9% to $1,233 this month, while two bedrooms remained flat at $1,392. On a year over year basis, one and two bedroom prices are up 8.3% and 3.2%, respectively.
The key thing is that home owners with a fixed rate mortgage did NOT see their monthly payments increase. They did build equity and wealth though…
Commercial Property Prices Decline Again
Commercial property pricing declined for the 7th month in a row according to Ten-X. They said that the commercial real estate sector remained in the doldrums in November with nationwide commercial pricing edging down by 0.1%.
Ten-X Chief Economist Peter Muoio said:
The U.S. presidential election is a year behind us, but the events of intervening months have done nothing to alleviate investors’ wariness. Instead, the Ten-X CRE Nowcast’s annual growth rate continues to reach new lows. Pessimism about fundamentals, a policy environment in a constant state of flux, and impending interest rate hikes are all adversely affecting commercial real estate and the market’s outlook at this stage is wary.
You can;t blame anyone for feeling uneasy about the economy with the possible tax reform…
AI Has Already Taken Over, It’s Called the Corporation
From Counter Punch:
Futurists warning about the threats of AI are looking in the wrong place. Humanity is already facing an existential threat from an artificial intelligence we created hundreds of years ago. It’s called the Corporation.
Corporations, just like a potential runaway AI, have no intrinsic interest in human welfare. They are legal constructions: abstract entities designed with the ultimate goal of maximizing financial returns for their investors above all else. If corporations were in fact real persons, they would be sociopaths, completely lacking the ability for empathy that is a crucial element of normal human behavior. Unlike humans, however, corporations are theoretically immortal, cannot be put in prison, and the larger multinationals are not constrained by the laws of any individual country.
A must read for sure and something I have felt was true for a long long time. The unfeeling uncaring corporations are a big threat…
That’s it for today! As always, please share to impress your friends and family!