Economy Watch: Housing Starts Up in June; Beige Book Cautiously Optimistic; Bernanke Day Two
- Jul 19, 2012
Dees Stribling, Contributing Editor
The Census Bureau reported on Wednesday that U.S. housing starts were at an annualized rate of 760,000 units in June. That’s 6.9 percent above the revised May estimate of 711,000 and 23.6 percent above the June 2011 rate of 615,000. So while the rate is still low by historical standards, it’s peeking out of the cellar for the first time in years.
This time around, the majority of the monthly increase was single-family housing starts, which in June were at an annualized rate of 539,000 units. That’s 4.7 percent above the revised May figure of 515,000. The more volatile multifamily rate in June was 213,000.
Building permits, on the other hand, edged down a bit in June, according to the bureau. Units authorized by building permits, a forward indicator, were at an annualized rate of 755,000 units. That’s 3.7 percent below the revised May rate of 784,000, but 19.3 percent above the June 2011 rate of 633,000.
Beige Book More Optimistic About RE, Less About the Economy
The latest Federal Reserve Beige Book, which was released on Wednesday, took note of the improving housing market. “Reports on residential housing markets remained largely positive,” the Fed said. “Sales were characterized as improving in Philadelphia, New York, Richmond, Chicago, St. Louis, and Minneapolis, while home sales increased in Boston, Cleveland, Atlanta, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.” (Those are Federal Reserve districts, not metro markets.)
Recent activity in commercial real estate markets has been mixed according to the Beige Book. “Modest improvements were noted in Boston, Atlanta, and St. Louis, and demand strengthened in the San Francisco District. Softer conditions were reported in the New York and Richmond Districts, while demand held steady in the Philadelphia and Dallas Districts.” Nonresidential construction activity varied as well.
Overall, however, the Fed wasn’t as sanguine about the state of the economy as it was about the housing market. Economic activity continued to expand at a “modest to moderate pace” in June and early July, the Fed said, which in Fed-speak means lousy but not off a cliff yet.
Bernanke Watch, Day Two: Federal Reserve Chairman Ben Bernanke was back before Congress again on Wednesday, and Fed-watchers hoping for anything new (say, QE3) were disappointed. The chairman said, again, that the U.S. economy isn’t that good, but that the central bank is watching things closely. Just in case.
Bernanke also told Rep. Ron Paul (R.-Tex.) and other like-minded members of Congress to butt out of the Fed’s business. The chairman was polite about it, of course, but asserted that an “audit” of the Fed by Congress would be a “nightmare scenario” that would “create a political influence” and have a “chilling effect,” on the central bank. By audit, Paul means an investigation by the legislative branch into the Fed’s decision-making process, not a financial audit (which happens annually). There’s little secret about what Paul would really like to do about the Fed, since he wrote a book called “End the Fed.”
Wall Street had a decent up day on Wednesday, with the Dow Jones Industrial Average gaining 103.16 points, or 0.81 percent. The S&P 500 and the Nasdaq were up 0.67 percent and 1.12 percent, respectively.