Ian Shepherdson
Ian Shepherdson
Ian Shepherdson is an award-winning British economist. He is the founder and Chief Economist of Pantheon Macroeconomics, an economic research firm located in Newcastle, England, with an office in White Plains, New York. In February 2015, he was named The Wall Street Journal's US economic forecaster of the year for the second time, having previously won the award in 2003...
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If these declines were part of the normal economic cycle we would now call for a recession in the U.S., but they aren't. The index is responding to a shock, and we expect it quickly to rebound.
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There is, in short, no sign that the housing market has turned down. The lack of supply of existing homes simply means that prices will rise more quickly -- and with mortgage rates at just over 8 percent, there won't be any slowdown in home sales anytime soon.
anytime existing homes housing lack market means mortgage prices quickly rates rise sales sign simply supply turned
There is, in short, no sign that the housing market has turned down, ... The lack of supply of existing homes simply means that prices will rise more quickly -- and with mortgage rates at just over 8 percent, there won't be any slowdown in home sales anytime soon.
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The key question now is how quickly it recovers,
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In any event, a single durable good report will have little effect on the Fed.
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Still, this is a hugely encouraging report, pointing clearly to a vigorous recovery.
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Once rebuilding gets underway in earnest in the Gulf Coast, we expect much stronger construction numbers across the board. But that will be a story for the very end of this year and into 2006.
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The new Fed Chairman clearly expects to have to raise rates a bit further, but the extent of the tightening is dependent on the relative performance of the labor and housing markets.
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the need for higher rates may now be even greater than before the storm.
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The Fed will likely ease on Nov. 6, but the Beige Book has not changed the odds, ... And it tells us nothing about the future of the economy or Fed policy.
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The Fed will deal with (the housing-jobs mix) by hiking in January and March and hoping that the housing softening will be sufficient to get them off the hook by May, though I think that's a close call.
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The Fed's minutes do not change the near-term outlook for policy despite the strong market reaction. Clearly there is some debate as to how much further tightening will be necessary, as the minutes say the number of hikes will likely 'not be large,' but 'large' is undefined. This does not read like a Fed where everyone is looking for a reason to stop.
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The Fed's chief worry is still the labor market. So long as the unemployment rate does not fall further, and clear signs of consumer slowed own emerge, the Fed will be able to leave rates on hold.
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The Fed's chief worry is still the labor market, ... So long as the unemployment rate does not fall further, and clear signs of consumer slowed own emerge, the Fed will be able to leave rates on hold.