This Morning’s Key Economic Data - CPI and Housing Starts for October

November 18, 2009 – Today’s Key Economic Data – Consumer Price Index For October, Housing Starts and Building Permits for October  – This morning’s CPI data came in higher than expected, up 0.3% in October – driven by higher energy prices (up 1.5%). Inflationary pressures remain tame, but with the dollar expected to continue to slide, look for the CPI number to continue to rise into 2010.

The housing starts and building permits numbers came in significantly less than expected. What is surprising to us is that expectations were as lofty as they were. In our opinion,  the Street and economists are going to have to adjust some of their assumptions and we just aren’t going to get back to the kind of expansion in home building that we saw in the last decade. That kind of growth, fueled by leverage and debt spending – and low interest rates – is not sustainable over the long-term.

Moreover, with bank lending  still plugged up, and unemployment on the rise, as well as foreclosures and mortgage delinquencies, it just seems crazy to think that the housing market is going to be able to achieve the expectations that had been set.

Excerpt from Press Release

 Consumer Price Index - October 2009On a seasonally adjusted basis, the Consumer Price Index for All Urban Consumers (CPI-U) rose 0.3 percent in October, the U.S. Bureau of Labor Statistics reported today. The index has decreased 0.2 percent over the last 12 months on a not seasonally adjusted basis.  

The seasonally adjusted all items increase largely reflected advances in the indexes for energy and for new and used motor vehicles.  The energy index rose for the fifth time in the last six months, advancing 1.5 percent as the indexes for gasoline, fuel oil, natural gas, and electricity all increased. The index for all items less food and energy rose 0.2 percent in October, the same increase as in September. The indexes for used cars and trucks and for new vehicles both rose sharply and together they accounted for over 90 percent of the increase in the index for all items less food and energy. The indexes for airline fares and medical care also increased, while the shelter index was unchanged and the indexes for apparel and recreation declined.  

The food index also increased in October, rising 0.1 percent after declining in two of the previous three months. The index for food away from home increased slightly, while the food at home index was unchanged.  Within the food at home group, the index for dairy and related products rose significantly, while the fruits and vegetables index declined for the fourth straight month.

NEW RESIDENTIAL CONSTRUCTION IN OCTOBER 2009The U.S. Census Bureau and the Department of Housing and Urban Development jointly announced the following new residentialconstruction statistics for October 2009:

BUILDING PERMITS

Privately-owned housing units authorized by building permits in October were at a seasonally adjusted annual rate of 552,000.

This is 4.0 percent (±1.9%) below the revised September rate of 575,000 and is 24.3 percent (±1.9%) below the October 2008 estimate of 729,000.Single-family authorizations in October were at a rate of 451,000; this is 0.2 percent (±1.0%)* below the revised September figure of 452,000. Authorizations of units in buildings with five units or more were at a rate of 85,000 in October.

HOUSING STARTS

Privately-owned housing starts in October were at a seasonally adjusted annual rate of 529,000.

This is 10.6 percent (±8.7%) below the revised September estimate of 592,000 and is 30.7 percent (±8.3%) below the October 2008 rate of 763,000.Single-family housing starts in October were at a rate of 476,000; this is 6.8 percent (±7.5%)* below the revised September figure of 511,000. The October rate for units in buildings with five units or more was 48,000.

HOUSING COMPLETIONS

Privately-owned housing completions in October were at a seasonally adjusted annual rate of 740,000.

This is 1.9 percent (±12.4%)* above the revised September estimate of 726,000, but is 29.9 percent (±9.7%) below the October 2008 rate of 1,055,000.Single-family housing completions in October were at a rate of 528,000; this is 10.7 percent (±14.5%)* above the revised September figure of 477,000. The October rate for units in buildings with five units or more was 200,000.