Thursday, September 29, 2011
At This Point We're Just Looking To Slow The Bleeding
US initial claims are lower this week. Four-week average at 417K, but that isn't very encouraging for employment.
GDP Q2 reported at 1.3%. GDP Q3 ought to be at least 1.7-1.8%. We'll see. The US seems to be entering another few hard months based on the early store/services data I'm getting - but maybe this is just temporary based on BTS spending. A lot of households might be tight this month.
I think the US restructuring will take quite some time. It's focused on the states and localities at this point, but that will surely take another five-six years?
Census publishes estimates of state and local tax revenues. The numbers are not necessarily directly reflective of the economy, because tax increases abound, and on occasion in good times sales taxes and so forth will be cut. In particular, looking at the data through Q2, it's remarkable how much Q2 property tax revenue has risen in a few years. Needless to say it is not because of massive building or value increases; it's because of higher millage rates. In most states, when the value of the property goes down, the locality just increases property tax rates. Home values are reported by Case-Shiller to be back at 2003/2004 levels. In Q2 2004, property tax receipts were 61,509. In Q2 2011, property tax receipts were 88,518. In Q2 2001, property tax receipts were 51,249. Call me Ishmael, but I don't see how this is not creating a further impact for would-be homebuyers in some areas.
I was flipping through Zillow looking at their estimates, and in some of the high-tax areas, you get properties with an estimated total housing payment composed 70% of property taxes. This is reaching the breaking point, surely?
Yep, in Washinton state where there is no income tax, property taxes are very high. In the very, very liberal King County such tax rates are in effect. In my rural Skagit County property taxes are way too high all thinmgs considered. They have not gone down during the real estate collapse - an indictment of the appraisal techniques they use. Many are complaining, but the county avers they cannot live with less revenue. An example of government not grasping the fact that the bigger their share of the pie the worse it is for the economy. There will be some changes made come election time.
Honestly, that type of work output might be shockingly productive. My experience is that most of the actual value-add in a week is done in a surprisingly small number of hours. The rest is just looking busy for management.
Especially for training functions and some admin/supervisory, I think it's a great idea. We shouldn't be sending the average 72 year old up the utility pole or out driving a truck, but older workers are frequently very productive and knowledgeable.
And yes, people are generally healthier now at older ages. Everybody's complaining about the cost of healthcare, but I remember what it was like when I was a kid. Aside from the heavy and clumsy stone tools we used, people died much earlier and wore out much earlier. Especially arthritis - I used to see a lot of grandpas and grandmas just hobbling along. What I chiefly notice is that older people tend to be thinner now and move much better, and don't try to convince me that this doesn't indicate much better health!
And I don't think they are. I think that markets without relatively high property taxes will begin rebounding next year, but that states and areas with high property taxes will have a difficult time escaping.
A 30 year mortgage at 4% (true, you need a good downpayment and good credit and verifiable income) would seem to enhance affordability, but when you look at overall housing payments, it becomes clear that hard-pressed markets may be seeing far less relative boost from Fed actions.
Thanks and hang in there....
"Even at face value the reported 1.34% growth rate is either sluggish or pathetic, depending on your chosen inclination to spin. When a more reasonable "deflater" is used to calculate the "real" numbers, the second quarter is actually shown to be in contraction. And when using such alternative BLS inflation data the most recent past quarter is the 2nd consecutive "real" quarter to have such negative growth -- meeting one of the common definitions of a new recession.
The restive public clearly understands this -- even if the academicians at the BEA don't. The public has been seeing their (per-capita) "slice of the pie" contract now for six months, and no amount of well spun "sluggish growth" can alter their view of a shrinking reality"
Still, it's better than -2%, isn't it? Don't forget that these numbers get revised for YEARS.
-- And using the same alternate BLS "deflaters" the real per-capita GDP can be shown to be contracting at a -1.45% annualized rate. Similarly, per-capita disposable income was contracting at a -0.92% annualized rate. These per-capita numbers are what impacts individual Americans and it is the real source of the frustration within the populace."
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