The MBA reports that mortgage applications fell -3.9% last week, with purchases down -2.0% and refis down -5.0%.
The Federal Open Markets Committee left short-term interest rates unchanged today, at 0% to 0.25% for the Fed Funds rate target.
In today’s economic forecast, the Fed lowered it’s forecasts for both unemployment and economic growth, noting that growth is “moderating”. The Fed’s forecasts:
2015: 2.3 to 2.7%
2016: 2.3 to 2.7%
2017: 2.0 to 2.4%
longer run: 2.0 to 2.3%
2015: 0.6 to 0.8%
2016: 1.7 to 1.9%
2017: 1.9 to 2.0%
longer run: 2.0 %
2015: 52 to 5.3%
2016: 4.9 to 5.1%
2017: 4.8 to 5.1%
longer run: 5.0 to 5.2%
Essentially, the sub-par economic growth we’ve experienced since 2009 will continue for the foreseeable future.
Executive and regulatory over reach, aka trashing the Constitution? Even Lawrence Tribe has problems with the Obama agenda:
As President Obama forges ahead in his fight against climate change, a leading Harvard Law School scholar says a central piece of the president’s strategy is akin to “burning the Constitution” merely to advance an environmental agenda.
In testimony before the House Energy and Commerce Committee on Tuesday, Harvard constitutional law professor Laurence H. Tribe said the Environmental Protection Agency’s plan to limit greenhouse gas emissions from U.S. power plants is built on a shaky legal foundation. The proposal, Mr. Tribe argues, far exceeds EPA’s authority under federal law and strikes a blow to the 10th Amendment by essentially making states subservient to Washington on energy and environmental matters.
Mr. Tribe’s testimony — with which other legal scholars strongly disagreed during Tuesday’s hearing — comes about a month before the D.C. Circuit Court of Appeals will hear arguments in a case that challenges EPA’s so-called “Clean Power Plan,” which would limit pollution from both new and existing power plants and is designed to reduce coal use across the country.
“EPA’s proposal raises grave constitutional questions, exceeds EPA’s statutory authority and violates the Clean Air Act,” said Mr. Tribe, who has argued before the Supreme Court dozens of times and represented Al Gore in the case that ultimately decided the 2000 presidential election.
“EPA is attempting an unconstitutional trifecta — usurping the prerogatives of the states, the Congress and the federal courts all at once,” he continued. “Burning the Constitution of the United States … cannot be a part of our national energy policy.”
On CNN this morning, White House aide David Simas avoided congratulating Prime Minister Benjamin Netanyahu on the Israeli elections. Instead, he would only congratulate the Israeli people on having an election.
“We want to congratulate the Israeli people for the democratic process for the election that they just engaged in with all the parties that engaged in that election. As you know now, the hard work of coalition building begins. Sometimes that takes a couple of weeks. And we’re going to give space to the formation of that coalition government and we’re not going to weigh in one way or another except to say that the United States and Israel have a historic and close relationship and that will continue going forward,” Simas said.
Hillary Clinton continues to be a dominant force heading into the 2016 presidential election, according to a new CNN/ORC poll. The former secretary of state maintains a broad lead over the field of potential Democratic challengers she could face in a nomination contest and sizable advantages over the leading contenders from the Republican side in general election match-ups.
Redbook reports that last week’s retail sales rose to a still-weak 2.7% on a year-ago basis, from the previous week’s 2.6%.
Housing starts unexpectedly fell a sharp -17.0% in February, to a 0.897 million unit pace, which is down -3.3% on a year-ago basis. Housing numbers have generally been weak for the last few months.
Hopefully, given Hillary’s latest scandal, Al Gore will be the only thing left standing on the Democratic side when the election rolls around. Because, well, because the Democrats deserve him. And Ezra Klein is all for him filling in for the “inevitable one.”
But that’s not my main subject today. Two notes of interest that are likely to get the short shrift in the press with all the usual nonsense flying around.
Global emissions of climate-warming carbon dioxide did not rise last year for the first time in 40 years without the presence of an economic crisis. “This is a real surprise. We have never seen this before,” said IEA chief economist, Fatih Birol, named recently as the agency’s next executive director.
So here is what is likely to happen. With this bit of news, you can expect to see a huge push by the Chicken Little contingent to claim credit and victory. Why see what they’ve done! Never mind the fact that the temperature hasn’t risen in over 10 years and forget about that brutal winter you’ve just survived. We’re winning against “global warming”.
Trust me … you’ll see it soon. Of course there will be no science to support their claims, but then that’s nothing new, is it?
Meanwhile, in the face of all that, Japan is increasing its use of coal as it continues to replace nuclear energy and we’re in the midst of an oil glut that doesn’t appear ready to tail off anytime soon.
“Yet US supply so far shows precious little sign of slowing down. Quite to the contrary, it continues to defy expectations,” said the IEA in its monthly Oil Market Report, which sharply revised up its output estimates for the end of last year and forecasts for the begging of 2015.
With US crude stocks striking all-time records, it noted storage capacity limits may soon be tested.
So cheap gas? Oh, yes, much cheaper than the Obama Administration and the Greenies would like.
The question then is with an abundance of cheap gas and other petro products, no warming in over 10 years and evidence that we’re not increasing the CO2 emissions, how inclined to you think the average joe is going to be to change his habits?
Yeah, not very. In fact, my guess is he’ll be quite resistant to the idea as he tools around in his SUV.
So, please, bring on the Goracle.
We need the entertainment.
The Empire State Manufacturing Survey fell from 7.78 to 6.90 in March, on softening orders.
The Fed reports that industrial production rose 0.1% in February, while capacity utilization in the nation’s factories fell -0.5% to 78.9%.
The NAHB housing market index slowed by -2 points to 53 in March.
Foreign accounts were big sellers of US long-term securities in January, as net demand for US securities fell $-27.2 billion.
On this week’s podcast we discuss many things. It’s on the Podcast page.
The University of Michigan’s consumer sentiment index for March fell very sharply to 91.2, down 4.2 points from February.
Producer prices for final demand fell -0.5% in February. Prices ex-food and -energy were down -0.5%, as well. Prices less food, energy and trade services were unchanged. On a year-over-year basis, PPI-FD is down -0.7% overall, up 1.0% less food and energy, and up 0.7% less food, energy, and trade services.
A “told you so” follow up on that $15 minimum wage hike in Seattle (and coming to San Francisco soon):
Seattle’s $15 minimum wage law goes into effect on April 1, 2015. As that date approaches, restaurant across the city are making the financial decision to close shop. The Washington Policy Center writes that “closings have occurred across the city, from Grub in the upscale Queen Anne Hill neighborhood, to Little Uncle in gritty Pioneer Square, to the Boat Street Cafe on Western Avenue near the waterfront.”
Of course, restaurants close for a variety of reasons. But, according to Seattle Magazine, the “impending minimum wage hike to $15 per hour” is playing a “major factor.” That’s not surprising, considering “about 36% of restaurant earnings go to paying labor costs.” Seattle Magazine,
“Washington Restaurant Association’s Anthony Anton puts it this way: “It’s not a political problem; it’s a math problem.”
“He estimates that a common budget breakdown among sustaining Seattle restaurants so far has been the following: 36 percent of funds are devoted to labor, 30 percent to food costs and 30 percent go to everything else (all other operational costs). The remaining 4 percent has been the profit margin, and as a result, in a $700,000 restaurant, he estimates that the average restauranteur in Seattle has been making $28,000 a year.
“With the minimum wage spike, however, he says that if restaurant owners made no changes, the labor cost in quick service restaurants would rise to 42 percent and in full service restaurants to 47 percent.”
Key quote: “It’s not a political problem; it’s a math problem.” Of course it is a “political problem” because it is clueless politics that pushed this. However, for the owners, it is indeed a “math problem”. And the math for staying open doesn’t add up.
Are there alternatives to closing. Sure. But they’re the same ones we’ve talked about for years:
Restaurant owners, expecting to operate on thinner margins, have tried to adapt in several ways including “higher menu prices, cheaper, lower-quality ingredients, reduced opening times, and cutting work hours and firing workers,” according to The Seattle Times and Seattle Eater magazine. As the Washington Policy Center points out, when these strategies are not enough, businesses close, “workers lose their jobs and the neighborhood loses a prized amenity.”
Welcome to the land of $17 dollar cheeseburger. And, as you can figure out fairly quickly, everything else will be more expensive too … which, of course, erodes the purchasing power of that $15 wage. More importantly, if you work for one of those establishments that is closing, your wage is $15 times zero hours, isn’t it?
Initial weekly jobless claims fell 36,000 to 289,000. The 4-week average 3,750 to 302,250. Continuing claims rose 13,000 to 2.417 million.
Falling auto sales drove overall retail sales down -0.6% in February. Sales less autos fell -0.1%, and sales less autos and gas fell -0.2%.
Export prices fell -0.1% in February, while import prices rose 0.4%. On a year-ago basis, prices are down -5.9% for exports and -9.4% for imports.
The Bloomberg Consumer Comfort Index fell -0.2 points to 43.3 in the latest week.
Business inventories were unchanged in January, while a -2.0% drop in sales drove the stock-to-sales ratio up to 1.35. The stock-sales ratio has been rising steadily since July, 2014.
February’s Treasury deficit was $192.3 billion, and the fiscal year-to-date deficit is 2.7% higher than February 2014 at $386.5 billion.
The Fed’s balance sheet rose $1.7 billion last week, with total assets of $4.489 trillion. Reserve bank credit rose $1.7 billion.
The Fed reports that M2 money supply fell by $-7.1 billion in the latest week.
Or so the most recent Gallup poll says:
Yes, that’s right – climate change.
Notice the top “problem”, and apparently increasingly seen as such by more and more Americans.
Notice also that every other problem listed is one in which government has at least a finger in if not stuck in it up to the elbow.
Our public education system is not good – it’s run by the government. Our federal budget is a disaster – government ill-discipline. Foreign policy doesn’t exist – government malfeasance. Terrorism is increasing – government ineptitude. National security at risk – government incompetence. Race relations – government partisan bias. Poverty – government enabling. And healthcare – don’t even get me started. Etc. etc.
Every “problem” under the top problem have become more of a problem because of government meddling, incompetence, over-reach, bumbling, malfeasance or partisan bias.
And yet one of Obama’s stated goals as president was to again make big government “cool”.
Well, heck of a job there, Barack.