Archive for February, 2010

New House Sales in Perspective: January 2010

Wednesday, February 24th, 2010

This chart uses the style of my patented(*) Weekly Claims reports, and applies it to another series with strong seasonal variation: New House Sales(**). The actual data are used (without seasonal “adjustments”) and plotted in context to allow comparisons (without needing “adjustments”). Historical data are included back to 2004.

This chart shows something that is well known, and puts new perspective on something less well known, and a bit disturbing. First, we see that sales peaked in 2005 (and just to be safe, 2004 is plotted with dashes). And, for each month from 2006 until late 2009 each year’s sales was weaker than the prior years. This much was well known. Today’s release on January 2010 sales is disturbing. The actual number is lower than in 2009! (2009 was, until now, lower than any prior data point back to the start of the series in 1963. Prior to 2010 (and 2009) the low for January was 28 thousand homes, back in 1982. And the population and number of households are both much larger today.)

Actual New House Sales, 2004-present (N.S.A.)This new data suggests that the government’s attempts to prop up demand for houses are failing. Perhaps, in order to improve demand for houses, we need  improved business and employment conditions? Tax gimmicks can induce some people who were ready to buy a house to do so earlier, but in the long run people will not buy many houses unless they are confident they will earn enough to make the payments. Furthermore, the market must be stable enough that people will not worry about suffering large capital losses if a personal crisis forces them to sell unexpectedly. Both of those require less one-time government market intervention, which doesn’t sustainably stabilize either jobs or prices, rather than more! It is unfortunate that neither the Realtors nor the Homebuilders seem to grasp this point, since they appear to have the attention of Congress, yet they have repeatedly asked only for tax gimmicks, rather than sustainable solutions…
* – Just kidding… but I do think it’s a good style for this class of data!
** – It takes more than just a structure to make a house into a home, so I reject the term “New Home” sales. (You can buy & sell houses, but you have to <i>make</i> your home – yourself!)

Ethical Investing Dilemmas, Part 2: Stock funds in the 401k?

Tuesday, February 23rd, 2010

What do you really own, in your 401k?  Those shares of stock, those bonds – are they really the best way to invest in America’s future? Your future? The world’s?

If your 401k plan is like mine, you have some mutual fund choices – maybe even a lot of them. The mutual funds are either “passive” (index) stock funds, with a little of everything (within the index), or they are “active” (managed) stock funds… plus some bond funds. One example is the S&P500 index of most of the largest U.S. corporations.

Now, I save into the 401k because of how the game is rigged: I like to defer taxes until I actually need the money, and there’s the “free money” in the form of a “company match”. But I’m not happy with where I have to put my money in order to get those benefits. Do I really want to be financing the 500 largest corporations in the U.S.? Not all of them are exactly paragons of wise economic activity! Just look at what the fraud banking and health care sectors have been bribing lobbying Congress for… or the war-profiteers military-industrial complex… or the toxic junk & fast food vendors… or the telecommunications and power monopolies utilities… do I want to be investing in all THAT? Is investing supposed to be about profiting from the weaknesses of others, or about building up our collective strength? Even for otherwise reasonably productive large corporations, too often I hear about cutting quality in the name of profits, failing to actually serve their customers, and distributing rewards to management rather than shareholders.

That is not the system I want to be supporting and sustaining with my hard-earned savings. I cannot count on such a system to provide for my retirement, nor would I want to think that my last days of peace and relaxation were funded by such activities! So, I say no to the S&P500. And despite various fancy titles, unfortunately the other stock funds are pretty much the same witches’ brew.

No stock funds for me… So, what about bonds? This is long enough, so I leave that for the next post…

Weekly Claims, Feb. 18, 2010

Thursday, February 11th, 2010

Update Feb. 18: similar chart as last week, but the new “Job Engine Oscillator” has been added… This ranges from 0 to 100%, with 100% being a strong economy – claims at a minimum (for a given week) within the data on the chart, and 0% being a terrible economy – claims at a maximum (for a given week)…  This week’s data shows a drop in the Oscillator and a weakening of claims. Making matters worse, one wonders whether the claims last week may have been impacted by the East Coast blizzard.

The weekly unemployment claims data is looking a bit better than in early January, but it still sits midway between the “healthy economy” levels and last year’s “panic” levels.  This doesn’t feel like a recovery. I will try getting the equivalent data from the 2000-2005 period for comparison..

Weekly Claims w/ Oscillator, Feb. 18, 2010