Morning Report: Awaiting the Fed 9/17/15

Markets are lower this morning after housing starts disappoint. Bonds and MBS are flattish.

Today is Fed day. We should get the decision around 2:00 pm EST. Expect bond market volatility (or at least be prepared for it). The consensus seems to no move and very hawkish language in the statement.

Initial Jobless Claims fell to 264k last week, an extremely strong reading. People who have jobs are keeping them.

The Bloomberg Consumer Comfort Index fell to 40.2 from 41.4 last week. 31% of respondents think the economy is excellent / good, while 69% think it is not-so-good / poor.

Housing starts fell to a 1.12 million pace in August, below the 1.16 estimate. July was revised downward from 1.21 million to 1.16 million. Building Permits rose to 1.16 million from an upward-revised 1.13 million. Both single fam and multi-fam dropped. We are entering the seasonally slow period for the builders, so I wouldn’t read too much into these numbers.

We have tremendous pent-up demand for homes and the inventory of homes for sale is very light. So why aren’t we seeing more homebuilding? Part of the problem is a shortage of labor. Many of the construction workers from the housing boom have either left to new industries (mainly energy), aged out of the workforce, or left the country. 22% of construction workers are foreign, and the NAHB is asking for a temporary guest worker program to fill demand for workers. Right now, the builders are stealing skilled workers from each other using higher pay as an incentive to move.

This of course begs the question why there is a shortage in the first place. The labor force participation rate is stuck at almost 40 year lows and presumably many would want these jobs, which pay well. They aren’t retail / hospitality minimum wage jobs. Are the people who involuntarily left the workforce too old to do construction work? Are they untrainable? It seems strange we would have labor shortages with so much apparent slack in the labor market, but here we are….

31 Responses

  1. Dare I say it? … Frist!


  2. “This of course begs the question why there is a shortage in the first place. ”

    All those people are too good to swing a hammer. At least in their own minds.


  3. Have we leapt forward or backward in time?


  4. I don’t think it is unskilled construction workers – it is skilled construction workers: electricians, plumbers, etc…

    Just as the housing bubble was deflating, there was hellacious demand for skilled labor as the fracking boom began. I think many left the industry…


    • See anything else unusual in the above article?

      I missed it. Tell.

      Addendum – you don’t mean just that it is poorly written, do you?


    • McWing:

      See anything else unusual in the above article?

      Fantastic fisking by Williamson. A great idea for a website dedicated to properly editing all NYT stories.


  5. I’d remove any and all campaign finance laws but I am fascinated by candidates that claim they are not influenced by their donors. Why the fuck do they think people donate to them? Do they believe that they are, er beloved or is it a polite fiction?


    • I’d remove any and all campaign finance laws

      How about full disclosure laws? How about foreign contribution limits/bans?


      • Mark:

        How about full disclosure laws?

        I used to think full disclosure laws were reasonable, but I have changed my mind in the wake of the Brendan Eich/gay marriage event.

        If a person’s votes should not be a matter of public record, why should his donations be?


  6. “Why the fuck do they think people donate to them?”

    it’s like a cover charge for the club. gets you in the door. doesn’t mean you get to go backstage.


  7. True, but you ain’t getting backstage without being in the club, and being outside is dangerous, ask Bill Gates.


  8. “Jewish Man Dies as Rocks Pelt His Car in East Jerusalem”

    I see those rocks just threw themselves. Much like those officer inovled shootings that use the passive voice. “shot were fired …”


  9. Anything and everything goes.

    Did the NYT article seem… Intentional?


  10. I bet the NYT claims objectivity. Would their readership decrease of the abandoned the pretense?


    • McWing:

      Would their readership decrease of the abandoned the pretense?

      Alas, probably not. Their bias is so obvious already they’ve pretty much all but abandoned the pretense anyway, to little effect.


  11. Disclosure laws stopped the Chinese from funding Clinton, I forgot.


  12. Only 1 dissenter


  13. This is why Jeb’s a douche:

    Trump constantly emasculates him and he keeps coming back for more. He’s Kevin Bacon in Animal House, “Thank you sir may I have another?”


  14. I was wrong, the PP video of a squirming fetus being dissected isn’t the last video, it’s the 7th.



  15. The way to shut Trump up is to talk policy.

    That said, Trump is a hanging curve ball waiting to be teed off on, and so far, no one is willing to take a cut…


  16. @mcwing: “I was wrong, the PP video of a squirming fetus being dissected isn’t the last video, it’s the 7th.”

    Fraud. Animatronic fetus. CGI. All faked. Everybody knows. Haven’t watched it myself, but I don’t need to because I know that conservatives and Republicans and pro-life types lie, and everything bad said about Planned Parenthood ever is entirely fraudulent, because Christianity.

    I’m wondering if the folks releasing the video are surprised at the reception of their whistleblowing. It’s like the American Communists going over to the Soviet Union, seeing first hand how horrible it was and how cruel, and coming back (or staying there) and praising Communism and lying through their teeth about the working conditions because it was “too important” to protect the dream of one day having a Communist Utopia in the US.


  17. @brentnyitray: “The way to shut Trump up is to talk policy.”

    I argue that it won’t shut him up. He’ll bulldoze through his answers with rah-rah make-your-head-spin non-answers and his supporters won’t care at all. Being the alpha male and having a pair of balls has always been and remains important.


  18. @gbowden41: “This is why Jeb’s a douche:”

    There’s lots of reasons, most of them having to do with the reasons the rest of them are. Political opportunists trying to find the magical position that will get them the nod, not actually trying to advance any particular agenda. And they don’t do it well, which is what distinguished Trump from the rest. Also, they tend to try and outdo each other, but always end up taking the same basic position as everybody else, but moreso, where as Trump finds an angle and exploits it (Iran Deal—terribly negotiated! We should have gotten our hostages back! That’s the problem with that deal!).

    ABC seems to be extremely hostile to HRC and guarded pro-Bush. I think that has to be because of the Jeb!/Disney connection.


  19. @scottc1: “If a person’s votes should not be a matter of public record, why should his donations be?”

    Because it’s informative of who the candidate that everybody else may be voting for (or against) might be beholden to, and discourages tit-for-tat and quid-pro-quo because anybody can point to favorable deals for particular large donors as being a relevant factor. That isn’t applicable with one man/one vote, but I honestly don’t care if individual votes are a matter of public record, either. 😉


  20. @markinaustin: “How about full disclosure laws? How about foreign contribution limits/bans?”

    I support full disclosure. I do not care about foreign contributions, and think those should be fine, too, provided they are completely and immediately disclosed to the public. So if Iran gives a US presidential candidate a million dollars, everybody knows straight away.


    • I think I have told this story before, here.

      ’96 campaign. Archibald Cox was a guest lecturer in Austin at the UT LS auditorium, and I went to hear him. He predicted that the next POTUS would be impeached for taking foreign money. He told us that at that point, it was widely speculated that Dole had received more than $10M from the Saud family, and WJC had received more than $5M from the Chinese. That was when I decided to vote for BigEars for a second time. Cox said there was always Canadian money in the campaign and usually some UK, too, but those were hundreds of thousands of dollars and no one ever did anything about it. He said money from China and Saudi Arabia was going to stink, especially since there was so much of it.

      In the end, WJC was impeached, but not for Chinese money. The FEC ordered the D campaign to pay back several million dollars and the R campaign to pay back about twice as much, finding the donations were illegal, but that was the end of that.

      I suspect that there has been even more foreign money since, especially since global corporations can now get into the fray.

      I am with KW. Full disclosure, perhaps with a de minimus exclusion to keep the exercise fluid enough to be useful.


  21. “Only moreso.”



  22. Like

  23. Why will candidates be any more likely to comply with your proposal?


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