Build Back Better Act Passes House…The U.S. House of Representatives passed the $1.85 trillion reconciliation bill, which now goes to the Senate.
What it means— Representatives held off on voting until the Congressional Budget Office (CBO) scored the measure to determine whether it raises the deficit.
Spoiler alert: it does, and by trillions more than the $160 billion estimated by the CBO. The act calls for paying benefits for just a few years while raising taxes for a decade. It’s not clear if the congress members voting for the bill and the CBO officials reporting on its budgetary effects hurt themselves by winking so hard as they announced the results.
Such budgetary shenanigans aren’t new or just the work of Democrats. While the party distorting the facts might change, the people paying for it never does. Taxpayers and consumers get stuck with the bill.
Powell Gets the Nod for Another Term as Fed Chair… Passing over Federal Reserve Governor Lael Brainard, President Biden announced that he will nominate Fed Chair Jerome Powell for another term.
What it means— Brainard was the progressive choice. She has called for the Federal Reserve to address social issues ranging from climate change to wealth inequality. President Biden said he chose Powell for continuity but added that Powell has committed to addressing climate change through monetary policy. The markets hated the news. Bonds sold off and equities traded lower, with investors thinking Powell would raise rates faster than Brainard.
Durable Goods Orders Fell 0.5% in October… The drop surprised analysts, who had forecast a 0.3% increase.
What it means— While orders fell for the month, they are still up 22.1% over this time last year, which explains a lot of the supply chain crunch. We’re moving 22% more goods through our system than we were just 12 months ago.
Shipping companies don’t keep an extra 20% of ships sitting around just in case orders pick up. There aren’t thousands of people waiting to be called up as truckers in case more goods need to be moved.
Thanksgiving shopping is expected to set a record even with in-store visits where shoppers know they are walking out with their purchase and not waiting on a shipper. Concerns over supply chain issues accelerated year-end spending beginning with Halloween. On-line shopping is +20% this month. Considering the sizeable increase in demand, the supply chain is holding up quite well.
Orders for non-defense capital goods excluding aircraft, a proxy for business spending, rose 0.6% last month. Corporate America is doing well, too.
Existing Home Sales Up 0.8% in October… Even with the rise last month, existing home sales are 5.8% lower than this time last year.
What it means— It’s all about investors, as all-cash buyers dominated sales last month, making up almost 25% of transactions. The median sale price was $353,000, up 13% over last year, and there’s only enough inventory for 2.4 months.
The feeding frenzy of late 2020 might be over, but prices remain elevated, which is pricing many first-time buyers out of the market. Single family rents have risen more than in sixteen years. With investors purchasing so many homes at high prices, we can expect rents to march even higher in the months ahead, as the new owners try to recoup their investments.
October New Home Sales Rose 0.4%… Even with the slight increase, new home sales remain 23.1% lower than this time last year.
What it means— It’s all about supply. Sales are much lower than last year, but the median sale price is a whopping $407,700, which shows that constricted supply is keeping prices high. New home sales figures zig and zag, and the current report comes with a 21% margin of error, but the trend is obvious. Sales are down as home builders move very cautiously, considering the high prices of materials, land, and labor. No one wants to be stuck with high-priced inventory when the music stops.
Lumber and labor costs are major factors for homebuilders starting projects. Lumber prices nearly tripled this year though the pricing bubble has popped bringing some relief. It will take months before lower costs arrive at warehouses.
Italian City Officials Move a Car That’s Been Parked in the Same Spot for 47 Years… For years, Angelo Fregolent parked his 1962 Lancia Fulvia in the spot in front of his newsstand in Conegliano, Italy, where he unloaded the papers. The newsstand is in the front of the home he shares with his wife. When he
retired in 1974, he parked the Lancia in the usual spot and never moved it again. The car became a social media sensation, as tourists took selfies with the auto and it earned a place on Google Maps.
But progress waits for no man. When traffic patterns changed, the vehicle became an obstacle. City officials moved the car but also paid for a new paint job. Because it is so well known, the car will be displayed in a local auto museum for a short time before being installed in a garden… across the street from the Fregolents’ home.
Data supplied by HS Dent Research
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