Okay, it’s not really secret. You can find it here, but the almost complete absence of media coverage might have led people to believe that the report was secret.
Anyhow, the numbers are striking. The report showed a decline in the rental vacancy rate from 8.8 percent to 8.6 percent. The vacancy rate for ownership units fell from 2.2 percent to 2.1 percent. While the quarterly drop by itself is not that impressive, it follows a sharp drop reported for the prior quarter. This suggests that the first quarter data was not a fluke, but rather indicative of a clear trend towards lower vacancy rates.
Comparing these numbers to prior years, the rental vacancy rate was 9.2 percent in the second quarter last year and 10.6 percent in the second quarter of 2010. This is the lowest number on the rental side since the early years of the bubble in 2001.
The vacancy rate on ownership units is down from 2.5 percent a year ago and a peak of 2.9 reached in 2008. It is important to remember that units change status all the time between rental and ownership, so the most important factor here is the general decline in the vacancy rate.
It is amazing that reporters ignore these data. The soaring vacancy rate in the years when house prices were rising rapidly was one of the ways to recognize that they were being driven by a speculative bubble. If supply is exceeding demand, then prices should not be rising. Unfortunately, most reporters and people in policy-making positions could not be bothered to look at these data back then. Apparently this is still the case.
Okay, it’s not really secret. You can find it here, but the almost complete absence of media coverage might have led people to believe that the report was secret.
Anyhow, the numbers are striking. The report showed a decline in the rental vacancy rate from 8.8 percent to 8.6 percent. The vacancy rate for ownership units fell from 2.2 percent to 2.1 percent. While the quarterly drop by itself is not that impressive, it follows a sharp drop reported for the prior quarter. This suggests that the first quarter data was not a fluke, but rather indicative of a clear trend towards lower vacancy rates.
Comparing these numbers to prior years, the rental vacancy rate was 9.2 percent in the second quarter last year and 10.6 percent in the second quarter of 2010. This is the lowest number on the rental side since the early years of the bubble in 2001.
The vacancy rate on ownership units is down from 2.5 percent a year ago and a peak of 2.9 reached in 2008. It is important to remember that units change status all the time between rental and ownership, so the most important factor here is the general decline in the vacancy rate.
It is amazing that reporters ignore these data. The soaring vacancy rate in the years when house prices were rising rapidly was one of the ways to recognize that they were being driven by a speculative bubble. If supply is exceeding demand, then prices should not be rising. Unfortunately, most reporters and people in policy-making positions could not be bothered to look at these data back then. Apparently this is still the case.
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It’s so nice not to exist. After all, the NYT told readers today:
“By all accounts, the next few years of declining deficits will be followed by years in which deficits will send the overall debt to unsustainable heights as the large baby boom generation ages, qualifying for ever-costlier medical benefits.”
Of course that isn’t my account. My account points out that the story of deficits that will “send the overall debt to unsustainable heights” is the story of a badly broken health care system. The United States already spends more than twice as much per person on health care as other wealthy countries. The tales of exploding deficits assume that this gap will continue to rise in the years ahead.
By 2022 these projections show the United States spending more than 20 percent of GDP on health care. In today’s economy this would be equivalent to more than $34,000 for an average family of four. Such costs would imply an unbearable burden regardless of whether health care was paid for by the public or private sector.
This is why serious analyst might describe the issue as a health care problem, not a deficit problem. If U.S. health care costs were in line with those elsewhere in the world, there would be no long-term deficit problem. But hey, as long as the inside Washington gang all agree, why bother with such details?
It’s so nice not to exist. After all, the NYT told readers today:
“By all accounts, the next few years of declining deficits will be followed by years in which deficits will send the overall debt to unsustainable heights as the large baby boom generation ages, qualifying for ever-costlier medical benefits.”
Of course that isn’t my account. My account points out that the story of deficits that will “send the overall debt to unsustainable heights” is the story of a badly broken health care system. The United States already spends more than twice as much per person on health care as other wealthy countries. The tales of exploding deficits assume that this gap will continue to rise in the years ahead.
By 2022 these projections show the United States spending more than 20 percent of GDP on health care. In today’s economy this would be equivalent to more than $34,000 for an average family of four. Such costs would imply an unbearable burden regardless of whether health care was paid for by the public or private sector.
This is why serious analyst might describe the issue as a health care problem, not a deficit problem. If U.S. health care costs were in line with those elsewhere in the world, there would be no long-term deficit problem. But hey, as long as the inside Washington gang all agree, why bother with such details?
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David Brooks concludes a bizarre column explaining our love for the Olympics with the ability to keep contradictory ideas simultaneously in our mind. We admire both glory of the winner and also the nobility of the good loser.
He uses this observation to then criticize “monomaniacs.”
“The world, unfortunately, has too many monomaniacs — people who pick one side of any creative tension and wish the other would just go away. Some parents and teachers like the cooperative virtues and distrust the competitive ones, so, laughably, they tell their kids that they are going to play sports but nobody is going to keep score.
“Politics has become a contest of monomaniacs. One faction champions austerity while another champions growth. ….
“The right course is usually to push hard in both directions, to be a house creatively divided against itself, to thrive amid the contradictions.”
Obviously, the right course is usually to push hard in both directions. We should both use modern medicine to cure people of illness and also let them die because we believe the power of prayer is more important. We should both eliminate segregation and racial discrimination and preserve them because of the inherent superiority of the white race.
What the hell does Brooks think he is saying here? There are any number of issues where there is right and wrong and David Brooks believes that every bit as much as the monomaniacs he is criticizing. He has apparently decided that there is no right or wrong in the debate over fiscal policy.
That’s fine, we would then expect a columnist for the country’s most important newspaper to give us the evidence for this position, not to call people names because they believe that the evidence supports one or the other position. (It does support the case for growth.)
Oh well, at least the NYT is giving a job to a person without the skills to compete in the modern world economy.
David Brooks concludes a bizarre column explaining our love for the Olympics with the ability to keep contradictory ideas simultaneously in our mind. We admire both glory of the winner and also the nobility of the good loser.
He uses this observation to then criticize “monomaniacs.”
“The world, unfortunately, has too many monomaniacs — people who pick one side of any creative tension and wish the other would just go away. Some parents and teachers like the cooperative virtues and distrust the competitive ones, so, laughably, they tell their kids that they are going to play sports but nobody is going to keep score.
“Politics has become a contest of monomaniacs. One faction champions austerity while another champions growth. ….
“The right course is usually to push hard in both directions, to be a house creatively divided against itself, to thrive amid the contradictions.”
Obviously, the right course is usually to push hard in both directions. We should both use modern medicine to cure people of illness and also let them die because we believe the power of prayer is more important. We should both eliminate segregation and racial discrimination and preserve them because of the inherent superiority of the white race.
What the hell does Brooks think he is saying here? There are any number of issues where there is right and wrong and David Brooks believes that every bit as much as the monomaniacs he is criticizing. He has apparently decided that there is no right or wrong in the debate over fiscal policy.
That’s fine, we would then expect a columnist for the country’s most important newspaper to give us the evidence for this position, not to call people names because they believe that the evidence supports one or the other position. (It does support the case for growth.)
Oh well, at least the NYT is giving a job to a person without the skills to compete in the modern world economy.
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I have often used to space to harangue news outlets for making too much of relatively small changes in weekly unemployment insurance (UI) claims. After all, it is just one week’s worth of data. The numbers are erratic and subject to substantial revision.
Still, I would have thought the decline in claims reported yesterday would have gotten some more attention. It wasn’t so much the single week decline that was newsworthy as the fact that the 4-week moving average, 367,250 was very close to the low for the recovery that we saw back in February.
More rapid job growth usually does follow declines in UI claims, although the relationship is far from exact. Nonetheless, the new claims seen over the last month is consistent with a much more rapid pace of job growth than we have been seeing. My bet for July is now in excess of 160k with some upward revision to the June number.
That’s still not really worth celebrating given our jobs deficit, but it is a step in the right direction.
I have often used to space to harangue news outlets for making too much of relatively small changes in weekly unemployment insurance (UI) claims. After all, it is just one week’s worth of data. The numbers are erratic and subject to substantial revision.
Still, I would have thought the decline in claims reported yesterday would have gotten some more attention. It wasn’t so much the single week decline that was newsworthy as the fact that the 4-week moving average, 367,250 was very close to the low for the recovery that we saw back in February.
More rapid job growth usually does follow declines in UI claims, although the relationship is far from exact. Nonetheless, the new claims seen over the last month is consistent with a much more rapid pace of job growth than we have been seeing. My bet for July is now in excess of 160k with some upward revision to the June number.
That’s still not really worth celebrating given our jobs deficit, but it is a step in the right direction.
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The NYT ran a piece on the new Congressional Budget Office estimates of the cost and coverage rates for the Affordable Care Act following the changes required by the Supreme Court ruling. It concluded the piece with a classic he said/she said:
“Representative Tom Price of Georgia, chairman of the House Republican Policy Committee, said the law was unaffordable, and he pointed to the $1.7 trillion price tag mentioned by the budget office.
But Representative Allyson Y. Schwartz, Democrat of Pennsylvania, said the law was a good deal that would ‘save $109 billion over the next decade, while increasing access to health care for millions of Americans.'”
Well that settles it, the paper has done its job.
How about telling us how large this sum is relative to projected income (about 0.85 percent)? How about as a share of projected federal spending (about 4.0 percent)? Maybe the paper could compare to the size of the tax cuts proposed by governor Romney (less than 50 percent)?
The he said/she said at the end of this piece is killing trees for nothing. It provides no useful information to readers. (We already knew that Republicans didn’t like the plan and Democrats do.) It would have required minimal effort to put these numbers in a context that provided useful information to readers.
The NYT ran a piece on the new Congressional Budget Office estimates of the cost and coverage rates for the Affordable Care Act following the changes required by the Supreme Court ruling. It concluded the piece with a classic he said/she said:
“Representative Tom Price of Georgia, chairman of the House Republican Policy Committee, said the law was unaffordable, and he pointed to the $1.7 trillion price tag mentioned by the budget office.
But Representative Allyson Y. Schwartz, Democrat of Pennsylvania, said the law was a good deal that would ‘save $109 billion over the next decade, while increasing access to health care for millions of Americans.'”
Well that settles it, the paper has done its job.
How about telling us how large this sum is relative to projected income (about 0.85 percent)? How about as a share of projected federal spending (about 4.0 percent)? Maybe the paper could compare to the size of the tax cuts proposed by governor Romney (less than 50 percent)?
The he said/she said at the end of this piece is killing trees for nothing. It provides no useful information to readers. (We already knew that Republicans didn’t like the plan and Democrats do.) It would have required minimal effort to put these numbers in a context that provided useful information to readers.
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Robert Samuelson’s column lays out the factors that caused the huge surplus predicted for the last decade by the Congressional Budget Office to turn into a huge deficit. Samuelson cites analysis of the $12 trillion shift from the Congressional Budget Office (CBO) and two “non-partisan” groups, the Committee for a Responsible Federal Budget and the Pew Fiscal Initiative.
Samuelson and these groups are careful to say that blame for this shift is widely shared, but that the largest chunk stems from weaker than projected economic growth and changes in technical assumptions. If we look more closely at the weaker than expected economic growth and some of those technical assumptions, the picture gets a bit more interesting.
The economy grew much more slowly than expected in 2001 and 2002 because of the collapse of a stock bubble. It grew much less rapidly than expected in 2008 and 2009 because of a collapse of the housing bubble. Some of the “technical changes” were the result of much lower capital gains income than had been projected. That is what happens when a bubble bursts. (The official data probably understates the falloff, since it is likely that much capital gains income shows up as normal income.)
In short, the main reason that the CBO projections understated the deficits over the last decade was that it twice failed to recognize asset bubbles. In fact, the impact of this failure on projections is even larger since some items on the Samuelson deficit list would not have been there absent the slower growth, like the Obama stimulus.
So there is a clear villain in this story, economic analysts who were too incompetent to recognize two huge bubbles and the impact that their collapse would have on the economy. Unfortunately, in Washington policy circles, such failures are a badge of honor (“who could have known?” is the official motto in these parts), so these folks continue to hold their jobs and get regular promotions and increased authority.
While we might prefer to see people with better knowledge of the economy in positions of responsibility, there is a bright side. These jobs keep people without marketable skills employed.
Robert Samuelson’s column lays out the factors that caused the huge surplus predicted for the last decade by the Congressional Budget Office to turn into a huge deficit. Samuelson cites analysis of the $12 trillion shift from the Congressional Budget Office (CBO) and two “non-partisan” groups, the Committee for a Responsible Federal Budget and the Pew Fiscal Initiative.
Samuelson and these groups are careful to say that blame for this shift is widely shared, but that the largest chunk stems from weaker than projected economic growth and changes in technical assumptions. If we look more closely at the weaker than expected economic growth and some of those technical assumptions, the picture gets a bit more interesting.
The economy grew much more slowly than expected in 2001 and 2002 because of the collapse of a stock bubble. It grew much less rapidly than expected in 2008 and 2009 because of a collapse of the housing bubble. Some of the “technical changes” were the result of much lower capital gains income than had been projected. That is what happens when a bubble bursts. (The official data probably understates the falloff, since it is likely that much capital gains income shows up as normal income.)
In short, the main reason that the CBO projections understated the deficits over the last decade was that it twice failed to recognize asset bubbles. In fact, the impact of this failure on projections is even larger since some items on the Samuelson deficit list would not have been there absent the slower growth, like the Obama stimulus.
So there is a clear villain in this story, economic analysts who were too incompetent to recognize two huge bubbles and the impact that their collapse would have on the economy. Unfortunately, in Washington policy circles, such failures are a badge of honor (“who could have known?” is the official motto in these parts), so these folks continue to hold their jobs and get regular promotions and increased authority.
While we might prefer to see people with better knowledge of the economy in positions of responsibility, there is a bright side. These jobs keep people without marketable skills employed.
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Reuters must be trying to win a Pulitzer in the bad business reporting category (sorry folks, you’ve got some stiff competition). The headline of a piece on the Commerce Department’s report on new home sales for June warned of the largest drop in sales more than a year. Are you scared?
If you look at the data, you would notice that May had one of the biggest jumps in sales in the last year, raising the rate to the highest level since the fall of 2008. Furthermore, three quarters of the drop was explained by a 60 percent decline in new homes sales in the Northeast. That could be real, but my guess is that this is some artifact of reporting that will be corrected when these numbers are revised next month. (I have not heard about the collapse of the economies in in NY, NJ, and MA.)
A little context would be helpful on this one. If May and June’s sales are averaged, we would be seeing a strong uptick in sales compared to earlier this year.
Reuters must be trying to win a Pulitzer in the bad business reporting category (sorry folks, you’ve got some stiff competition). The headline of a piece on the Commerce Department’s report on new home sales for June warned of the largest drop in sales more than a year. Are you scared?
If you look at the data, you would notice that May had one of the biggest jumps in sales in the last year, raising the rate to the highest level since the fall of 2008. Furthermore, three quarters of the drop was explained by a 60 percent decline in new homes sales in the Northeast. That could be real, but my guess is that this is some artifact of reporting that will be corrected when these numbers are revised next month. (I have not heard about the collapse of the economies in in NY, NJ, and MA.)
A little context would be helpful on this one. If May and June’s sales are averaged, we would be seeing a strong uptick in sales compared to earlier this year.
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As noted previously, the Washington Post has a huge stake in saying that NAFTA was a success. As a result, it simply cannot honestly discuss the state of Mexico’s economy in either its news or opinion pages. Today it has a piece that is headlined on the main page of its web site as “Mexico’s middle class begins to boom.” Readers would never know that Mexico has had the worst growth record in all of Latin America over the last decade.
Since the Post seems intent on recycling misleading news stories, I will recycle my comments. The segment below is from July 1 of this year:
The Washington Post is heavily invested in NAFTA. At the time of the debate it abandoned any pretext of being an objective newspaper, allowing both its opinion and news pages to be overwhelmingly dominated by proponents of the agreement. Since its passage the Post has refused to acknowledge that the agreement has had the intended effect in the United States of lowering the wages of manufacturing workers. (This is textbook economics. By putting U.S. manufacturing workers into more direct competition with their low-paid counterparts in Mexico, the result is that wages of manufacturing workers in the United States fall.)
The Post also refuses to acknowledge that the deal has failed to improve Mexico’s growth. In fact, a lead Post editorial in December 2007 told readers that Mexico’s GDP had quadrupled since 1988, which it attributed to the benefits of NAFTA. The actual increase over this 19 year period was 83 percent, which put Mexico near the bottom in growth for Latin American countries.
The Post’s prohibition of honest discussion of Mexico’s economy is apparently continuing. In a piece on Mexico’s elections today, the Post told readers:
“But annual growth during Calderon’s six years has averaged a middling 2 percent.”
This statement gives a whole new meaning to word “middling.” If we turn to the IMF’s data and look at per capita GDP growth in the years 2006-2011, we find that on average Mexico’s per capital GDP shrank by 0.1 percent annually over this period. This is not middling; this performance places Mexico dead last among Latin American countries (several countries in the Caribbean did worse.)
For some reference points, per capita growth in Argentina averaged 5.8 percent, Bolivia 2.8 percent, Brazil 3.1 percent, Ecuador 2.6 percent, and Peru 5.6 percent. There is nothing middling about Mexico’s economic performance over this period; it was bad.
And here’s a graph so that folks can put the Post’s graph showing the rise of Mexico’s per capita income in some context.
Source: International Monetary Fund.
See Mexico’s boom?
As noted previously, the Washington Post has a huge stake in saying that NAFTA was a success. As a result, it simply cannot honestly discuss the state of Mexico’s economy in either its news or opinion pages. Today it has a piece that is headlined on the main page of its web site as “Mexico’s middle class begins to boom.” Readers would never know that Mexico has had the worst growth record in all of Latin America over the last decade.
Since the Post seems intent on recycling misleading news stories, I will recycle my comments. The segment below is from July 1 of this year:
The Washington Post is heavily invested in NAFTA. At the time of the debate it abandoned any pretext of being an objective newspaper, allowing both its opinion and news pages to be overwhelmingly dominated by proponents of the agreement. Since its passage the Post has refused to acknowledge that the agreement has had the intended effect in the United States of lowering the wages of manufacturing workers. (This is textbook economics. By putting U.S. manufacturing workers into more direct competition with their low-paid counterparts in Mexico, the result is that wages of manufacturing workers in the United States fall.)
The Post also refuses to acknowledge that the deal has failed to improve Mexico’s growth. In fact, a lead Post editorial in December 2007 told readers that Mexico’s GDP had quadrupled since 1988, which it attributed to the benefits of NAFTA. The actual increase over this 19 year period was 83 percent, which put Mexico near the bottom in growth for Latin American countries.
The Post’s prohibition of honest discussion of Mexico’s economy is apparently continuing. In a piece on Mexico’s elections today, the Post told readers:
“But annual growth during Calderon’s six years has averaged a middling 2 percent.”
This statement gives a whole new meaning to word “middling.” If we turn to the IMF’s data and look at per capita GDP growth in the years 2006-2011, we find that on average Mexico’s per capital GDP shrank by 0.1 percent annually over this period. This is not middling; this performance places Mexico dead last among Latin American countries (several countries in the Caribbean did worse.)
For some reference points, per capita growth in Argentina averaged 5.8 percent, Bolivia 2.8 percent, Brazil 3.1 percent, Ecuador 2.6 percent, and Peru 5.6 percent. There is nothing middling about Mexico’s economic performance over this period; it was bad.
And here’s a graph so that folks can put the Post’s graph showing the rise of Mexico’s per capita income in some context.
Source: International Monetary Fund.
See Mexico’s boom?
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