Economy Watch: Fed Says No Tapering Yet; Housing Starts Rise
- Sep 19, 2013
Roughly five years after the financial panic that spawned the Great Recession, the Federal Reserve said on Wednesday — in a widely expected statement — that the central bank isn’t quite ready to taper down its $85 billion in monthly bond buying. It’s still dealing with the mess left over from the recession, to put things in a way the Fed never would.
In its statement, the Federal Open Market Committee noted that “taking into account the extent of federal fiscal retrenchment, the Committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program a year ago as consistent with growing underlying strength in the broader economy.” Despite the drag of sequestration, in other words, things are slogging along.
But not slogging along fast enough. The statement continued: “However, the Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases.” Almost all of the FOMC went along with the decision to leave QE3 where it is for now; only Esther George, head of the Federal Reserve of Kansas City and noted inflation worrier, voted nay, citing worries about future inflation.
Housing Starts Edge Up in August
The Census Bureau reported on Wednesday that U.S. private housing starts were at an annualized rate of 891,000 units in August. That’s 0.9 percent above the revised July estimate of 883,000 units, and 19 percent more than the August 2012 rate.
Unlike some monthly reports, multi-family starts weren’t driving the increase in overall starts this time around. Single-family housing starts in August were at an annualized rate of 628,000 units, which is 7 percent above the revised July figure.
Permitting, which is a leading indicator for the housing market, dropped in August, but that was because of the volatile multi-family sector. Privately owned housing units authorized by building permits in August were at an annualized rate of 918,000 units. That’s 3.8 percent lower than in July, but single-family authorizations in August came in at an annualized 627,000 units, up 3 percent for the month.
Wall Street spiked upward right after the FOMC statement on Wednesday, with the Dow Jones Industrial Average ending up 147.21 points, or 0.95 percent. The S&P 500 gained 1.22 percent and the Nasdaq was advanced 1.01 percent.