There are several reasons I think that house prices are close to a bottom. First prices are close to normal looking at the price-to-rent ratio and real prices (especially if prices fall another 4% to 5% NSA between the November Case-Shiller report and the March report). Second the large decline in listed inventory means less downward pressure on house prices, and third, I think that several policy initiatives will lessen the pressure from distressed sales (the probable mortgagesettlement, the HARP refinance program, and more).
Of course these are national price indexes and there will be significant variability across the country. Areas with a large backlog of distressed properties - especially some states with a judicial foreclosure process - will probably see further price declines.
And this doesn't mean prices will increase significantly any time soon. Usually towards the end of a housing bust, nominal prices mostly move sideways for a few years, and real prices (adjusted for inflation) could even decline for another 2 or 3 years.
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| Source: Bureau of Labor Statistics. Chart by Amanda Cox/New York Times. Horizontal axis shows months. Vertical axis shows the ratio of that month’s nonfarm payrolls to the nonfarm payrolls at the start of recession. Note: Because employment is a lagging indicator, the dates for these employment trends are not exactly synchronized with National Bureau of Economic Research’s official business cycle dates. |
The numbers in brief, from this morning’s Times 2011 earnings report:
Those are the public numbers. We’re left to extrapolate the dollars. My extrapolation is that the run-rate for the Times’ new digital revenue is about $86 million a year.
- 390,000 digital subscribers overall.
- Growth rate of 20% fourth quarter over third quarter.
In talking with Paul Smurl, VP of paid products for the Times, this week, I picked up some related datapoints that help us understand what this first year may lead to:
- 70%+ % of the Times’ print subscribers have now “authenticated.”
- Churn is less with digital than print customers: Skeptics opined that people might sign up, but then flee after sampling the paid digital product. The opposite appears true: Smurl says digital churn is less than print churn.
- About 12% of digital buyers live outside the U.S.: That’s a growing number. It’s an indication that the Times is becoming a global news medium.
Exploiting Sunday: It took about 12 seconds for Times’ readers to figure out the new subscription math, when the company when digital-paid last year. When they did the math and saw they could get the four-pound Sunday paper and “all-digital-access” for $60 less than “all-digital-access” by itself, they took the newsprint. Which stabilized Sunday sales, and the Sunday ad base.
Mr Moore had been riding on a cycle lane on the inside of queueing traffic and drew level with the tanker’s front axle virtually as it began pulling away. He tried to cycle straight on but was hit by the lorry - which had stopped in the advance cyclist’s “box” - as it turned.
PC Austin said the Highway Code made clear that Mr Moore had the right of way. “Had he [the driver] looked in his mirrors as Mr Moore cycled up, it’s very clear he would have been visible. He is utilising the cycle lane as is right and just.”
But under cross examination from Mr Gummer’s barrister Alexis Dite, PC Austin admitted: “It would have been a pertinent move, as a cyclist coming down the inside of a large goods vehicle, to show some level of caution.”
… Mr Gummer, who has more than 30 years’ experience as a HGV driver and a clean licence, was found not guilty of careless driving after insisting he had checked his mirrors before pulling away. The CCTV images showed he was indicating left as he waited at the lights.
The drop in the tax rates for an estimated 35,000 high-income households is part of a controversial policy passed by the Legislature and approved by voters in the 2010 election. At the time, everyone agreed that the 10.8 and 11 percent income tax rates contained in Measure 66 would only be a temporary solution to help balance the state budget.
On Jan. 1, the tax rate drops to 9.9 percent for individuals who earn more than $125,000 or joint filers with incomes in excess of $250,000. That top rate is still higher than the 9 percent it was before Measure 66. But the change means state government is projected to receive about $118 million less during the current, two-year budget period.
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| Quarterly change at seasonally adjusted annual rate. Source: NYTimes. Data source: Bureau of Economic Analysis |
Growth in the fourth quarter ... was driven mostly by companies rebuilding their stockroom inventories, and not by consumers who were shopping more or foreign businesses buying more American-made products. And companies are likely to have only so much appetite for refilling their backroom shelves if consumers are still unwilling to buy those products.
Consumer spending rose at an annual pace of 2 percent, slightly better than the 1.7 percent in the previous quarter, Friday’s report showed. But based on early data, it looks as if consumer spending deteriorated toward the end of the year. This may be because of unseasonably warm December weather, which probably lowered families’ household electricity and gas bills, said Jay Feldman, an economist at Credit Suisse.
One of the biggest drags on growth in the last quarter was government spending cuts at the federal, state and local levels, according to the Commerce Department report. National defense spending fell a whopping 12.5 percent, for example, an unusually large dip that economists do not expect to see repeated in the beginning of 2012. Strapped state and local governments are likely to continue cutting back in 2012, as they have done nearly every quarter for the last several years.
The IMF chopped its 2012 forecast for global growth to 3.3 percent from 4 percent just three months ago, saying the outlook had deteriorated in most regions. It projected world growth would strengthen to 3.9 percent in 2013.
The Washington-based lender said economic activity was decelerating but not collapsing. However, it warned that global growth would come in about 2 percentage points below its already soft forecast if European leaders allowed the crisis to fester.
For the first time since the debt turmoil erupted two years ago, the IMF said the 17-nation euro zone would likely slip into a mild recession in 2012, with output contracting by about 0.5 percent.
[The IMF] also called on governments to avoid imposing drastic spending cuts on already sickly economies. Fiscal tightening is necessary to correct the hefty debt burden left from the boom years, the IMF said, but it, "should ideally occur at a pace that supports adequate growth in output and employment".
"Countries with enough fiscal space, including some in the euro area, should reconsider the pace of near-term adjustment," it added, in a suggestion that will be widely viewed as aimed at Germany, which is pressing ahead with austerity measures despite its healthy budget position.
Jaime Guajardo, Daniel Leigh, and Andrea Pescatori of the International Monetary Fund recently studied austerity plans implemented by governments in 17 countries in the last 30 years. But their approach differed from that of previous researchers. They focused on the government’s intent, and looked at what officials actually said, not just at the pattern of public debt. They read budget speeches, reviewed stability programs, and even watched news interviews with government figures. They identified as austerity plans only those cases in which governments imposed tax hikes or spending cuts because they viewed it as a prudent policy with potential long-term benefits, not because they were responding to the short-term economic outlook and sought to reduce the risk of overheating.Another potential problem for such analysis is controlling for market perceptions of the governance and reliability of countries - if they can be trusted to meet their debt obligations. In other words is it more important for Greece to show that it has its fiscal house in order than it is for the UK? In my opinion, yes it is. I worry about skimping on investments in education, for example, catching up with countries 10 to 20 years down the road. The causal link will never be completely evident, but could be very important.
Their analysis found a clear tendency for austerity programs to reduce consumption expenditure and weaken the economy. That conclusion, if valid, stands as a stern warning to policymakers today.
But critics, such as Valerie Ramey of the University of California at San Diego, think that Guajardo, Leigh, and Pescatori have not completely proven their case. It is possible, Ramey argues, that their results could reflect a different sort of reverse causality if governments are more likely to respond to high public-debt levels with austerity programs when they have reason to believe that economic conditions could make the debt burden especially worrisome.
That may seem unlikely – one would think that a bad economic outlook would incline governments to postpone, rather than accelerate, austerity measures. And, in response to her comments, the authors did try to account for the severity of the government’s debt problem as perceived by the markets at the time that the plans were implemented, finding very similar results. But Ramey could be right. One would then find that government spending cuts or tax hikes tend to be followed by bad economic times, even if the causality runs the other way.
These transatlantic differences stem from the trajectory of private debt. Government borrowing soared everywhere after 2008 as government deficits ballooned. But in America the swelling of the public balance-sheet has mirrored a shrinking of private ones. Every category of private debt—financial, corporate and household—has fallen as a share of GDP since 2008. The financial sector’s debt is now at its 2000 level. Corporate indebtedness, never very high, has shrunk. So, more importantly, has household debt. America’s ratio of household debt to income is down by 15 percentage points from its peak in 2008, after rising by over 30 percentage points in the eight preceding years. McKinsey reckons America’s households are between a third and halfway through their debt-reduction process. They think the household-debt hangover could end by mid-2013.
| Undergraduate Degree | Total | % Who Are 1 Percenters | Share of All 1 Percenters |
|---|---|---|---|
| Health and Medical Preparatory Programs | 142,345 | 11.8% | 0.9% |
| Economics | 1,237,863 | 8.2% | 5.4% |
| Biochemical Sciences | 193,769 | 7.2% | 0.7% |
| Zoology | 159,935 | 6.9% | 0.6% |
| Biology | 1,864,666 | 6.7% | 6.6% |
| International Relations | 146,781 | 6.7% | 0.5% |
| Political Science and Government | 1,427,224 | 6.2% | 4.7% |
| Physiology | 98,181 | 6.0% | 0.3% |
| Art History and Criticism | 137,357 | 5.9% | 0.4% |
| Chemistry | 780,783 | 5.7% | 2.4% |
| Molecular Biology | 64,951 | 5.6% | 0.2% |
| Area, Ethnic and Civilization Studies | 184,906 | 5.2% | 0.5% |
| Finance | 1,071,812 | 4.8% | 2.7% |
| History | 1,351,368 | 4.7% | 3.3% |
| Business Economics | 108,146 | 4.6% | 0.3% |
| Miscellaneous Psychology | 61,257 | 4.3% | 0.1% |
| Philosophy and Religious Studies | 448,095 | 4.3% | 1.0% |
| Microbiology | 147,954 | 4.2% | 0.3% |
| Chemical Engineering | 347,959 | 4.1% | 0.8% |
| Physics | 346,455 | 4.1% | 0.7% |
| Pharmacy, Pharmaceutical Sciences and Administration | 334,016 | 3.9% | 0.7% |
| Accounting | 2,296,601 | 3.9% | 4.7% |
| Mathematics | 840,137 | 3.9% | 1.7% |
| English Language and Literature | 1,938,988 | 3.8% | 3.8% |
| Miscellaneous Biology | 52,895 | 3.7% | 0.1% |
