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St. Louis Fed: Custom Chart
Real Estate Newsletter Articles this Week: Existing-Home Sales Increased to
4.15 million SAAR in November
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At the Calculated Risk Real Estate Newsletter this week:
[image: Existing Home Sales]*Click on graph for larger image.*
• NAR: Existing-Home Sales Increase...
11 hours ago
35 comments:
Isn't the drop-off in Department Store sales caused by the up-swing in online purchases? Sure does look grim for the brick & mortar stores. Buying on-line is so easy, and saves gas!
Fred
Fred,
Isn't the drop-off in Department Store sales caused by the up-swing in online purchases?
In inflation adjusted terms, that's pretty much how I see it.
In absolute terms, the last similar drop was during the Great Recession though.
Wow, those people in the Sears video looked happy! And glamorous!
It's almost as if they were paid actresses. Regardless, I'm "sure" they shop at Sears.
Time to short Tiffany and Coach!
mab,
Time to short Tiffany and Coach!
I'd have Breakfast at Tiffany's but the jewels are hard on my crowns.
The leather products at Coach seem superior to the rawhide chew toys we normally get our dogs. I'm just not sure they would hold up well in a blind taste test.
In absolute terms, the last similar drop was during the Great Recession though.
"Great Recession" is sooooo 2000's!
Good thing Sears doesn't have any stores in Japan:
http://research.stlouisfed.org/fred2/graph/?g=nWU
Japanese population age 15-54
1 out of 7 . . . just gone, man
Fritz_O,
"Great Recession" is sooooo 2000's!
Need to think up something new and improved for the 2010s, should the "unexpected" come to pass again.
The Stupendous Stagnation!
Troy,
1 out of 7 . . . just gone, man
Despair.com: Persistence
It's over, man. Let her go.
It's her loss, man. It's her loss. I mean, it's more your loss, but, you know.
With a graph like that you'd think Japan Inc. would be sending me first class JAL tickets to get me back, LOL.
The older I get the more I want to move back, but that's probably just a sublimated wish to re-live my lost youth, since I went to Japan right out of college.
Still, I do get the sense Japan Inc needs me more than I need it . . .
http://research.stlouisfed.org/fred2/series/LFAC24MAJPA647S
Punks Age 15-24
Down 50% since 1995!
And yet exports are still up:
http://research.stlouisfed.org/fred2/series/XTEXVA01JPQ664S
Damn they're good.
How's the foot doin'?
http://i.imgur.com/POtYOGg.png is my update . . .
I actually housesat for most of September, which pushed me right up to the 190lb "danger zone".
Did a 7-day water fast combined with exercise and felt great after.
Main daily exercise is a 1/2 mile jog bookended by ~1 mile walks. Main goal here is to just be able to jog that distance without feeling overtaxed at the end.
End weight goal is still fitting in those 33" 501s from 20 years ago . . . still got ~2" of belly fat to lose . . .
AmeriCON's baby boom is about 10 years behind Japan's. I saw these number recently and they nail it.
The average American is 45 years old, has about $70K is his 401(k) and owes about $70K in mortgage debt and about $8K in consumer debt.
He has effectively 10 to 15 years to save enough money to retire. If he wants a retirement income two-thirds of his salary, then he needs to save something like $500K over the next 15 years.
How will he do it? He can't.
He will have to retire poor or live poor until retirement. Neither of these is particularly encouraging for real estate, consumer spending, GDP, or the stock market.
Troy,
How's the foot doin'?
The foot is 90% recovered I'd say.
The bad news is that I've gained serious weight since our cat passed away earlier this year. The seriously sprained ankle in early July added injury to insult. I was unable to do any climbing for 2 months. And to top it off, our dog had serious medical issues too. She's currently recovering from her surgery (10" incision in her belly) to remove a tumor on her liver.
The good news is that I've been climbing a lot of stairs over the past month or so. 50+ flights per day on average.
I'm very tempted to make 2014 a marathon year for stair climbing. I'd like to see just how many I can climb. My legs are in pretty good shape right now even after the ankle problem. I'm still having no problem at all doing 20 flights in 4 minutes.
Part of me thinks climbing 50 miles in a year would be a "fun" goal. Fun is relative of course. That would be about 1 mile a week, or about 75 flights per day. Seems doable if I can keep the motivation up. I'll turn 50 next year, so it won't be getting any easier in future years, lol.
Cabin fever is driving me to do it right now. We'll see if it holds.
Fritz_O,
He will have to retire poor or live poor until retirement. Neither of these is particularly encouraging for real estate, consumer spending, GDP, or the stock market.
It's a poor outcome. I retired early and live poor. At first it was a safety cushion, and perhaps now it is out of necessity. Real returns on safe retirement income have pretty much dried up.
I don't have any complaints though. I'd rather live poor with free time than live rich with a time consuming high stress job.
Put another way, there are worse things in life than retiring poor. Retiring very poor would be one of them though. That's stressful too. Sigh.
I'd rather live poor with free time than live rich with a time consuming high stress job.
that's just it, really. Poverty is simply having unmet needs.
Control what you "need", and you control your poverty.
I "retired" back in 2008. I shouldn't have, since I let the whole AppStore thing pass me by knowingly like a total idiot, and my savings are much too modest, but I consider the past 5 years to be psychic recharging, LOL.
btw, if you've got the time, check out Unity3D's keynote:
http://www.youtube.com/watch?v=2-9S2fNdH6E
You can skip to 55m to the good parts, and the ending has Richard Garriott talk about his enthusiasm with it. Debugging is still kinda dodgy, which is why I'm sticking with MonoGame for my heavy engine lifting, with a close eye towards integration into Unity for delivery of the final bits to customers.
AmeriCON's baby boom is about 10 years behind Japan's. I saw these number recently and they nail it.
http://research.stlouisfed.org/fred2/graph/?g=nYl
blue is US age 25-54 change YOY, red is Japan.
being a fluent Japanese speaker, and 80% leaning towards heading on out there again, I've spent hours if not days thinking about what the deal is with them.
The primary factoid to understand is that their baby boom is really tiny, amounting to nothing more than replacement of the lost population of the wartime years.
As seen in the above FRED graph, our baby boom is an immense demographic wave that is going to double the number of elderly from now through 2030. This wave prompted heavy investment in education ahead of me in the 1960s and 70s, and will prompt a lot of health care expense if not investment ahead of my medicare and SSA years in the 2030s.
Taxes simply have to go up a helluva lot here, but the problem is the electorate doesn't handle that all that well, making it impossible for politicians who desire reelection to do the right thing here.
Instead, they can try to reduce the growth in future benefits ("chained CPI"), but that's not going to be enough.
Now, Japan has the problem that 80%+ of their savings are in JGBs. I don't see those every being monetizable, though I guess Japanese do control that, they can simply cash them out as needed.
From the looks of that chart the department stores are heading straight into a zombie apumpkinlypse.
My produce pun may be out of date.
I retired early and live poor. At first it was a safety cushion, and perhaps now it is out of necessity. Real returns on safe retirement income have pretty much dried up.
Studies have shown that people would rather not lose money than make it. AMEN to that!
Economics calls it the marginal utility hypothesis. As people get more and more of something -- whatever it is -- each additional unit is of less and less value (except maybe for calories and heroin.) hahaha
Put another way, the loss of an additional dollar is of lesser consequence than the loss of a man's last dollar. Reduce this to the most extreme example, where a man has only one dollar, and if he loses it he will go hungry.
Of course, there's another theory called prospect theory. It says that investors are more ready to gamble with "house money" than their own. We can thank CONgress and the banksters for real life illustrations of this concept.
...our baby boom is an immense demographic wave that is going to double the number of elderly from now through 2030.
I think the key age here is 50ish. At 50 gambling with house money or anything else is over. 50 is "at the margin", where everything important happens.
Will 50-something investors panic out of stocks for good? It seems like a foregone conclusion to me. Maybe they'll panic out of houses too. And while they're at it, maybe they'll panic out of the habit of consumption. If Americans "at the margin" begin saving like the Japanese, what's next? The U.S. ECONomy turns Japanese? Is it happening before our very eyes?
Japan's problem is that its people do not consume enough. America's problem is just the opposite. We are too good at it. We consume with our eyes shut. We're the best consumers in the entire world. When it comes to buying things we don't need with money we don't have -- no other nation even comes close.
So much of our consumption though is just rent extraction in housing and health care.
http://research.stlouisfed.org/fred2/graph/?g=nYD
is real per-capita housing and healthcare expense.
Under $4000 in 1960 to $15,000 today.
$300/mo (2009 dollars) covered that in the 1950s, now it takes $1250/mo for these basic life expenses.
This is why we're broke, really.
Plus, our $800B/yr waste in national security. Where I live I get to see the ANG F-15s punch a hole in the sky every so often. That stirring sight is all the wealth-accretion we get for this $70M/yr operation expense, let alone the sunk capital cost of ~$1B.
Japan's defense expense is a rounding error on ours ($50B or so).
We do run an immense trade deficit, but that's the prerogative of being the reserve currency, and part of the Triffin Dilemma that our major export has to be USDs.
But I don't pretend to understand macro. I just wish people had the first clue about how the world works; the misinformation and abject ignorance floating around is really frustrating.
Policy-wise, our problems aren't that hard to solve, just back-out all the policy mistakes we've made 1983-now.
But one man's mistake is another man's mealticket.
Troy,
Taxes simply have to go up a helluva lot here, but the problem is the electorate doesn't handle that all that well, making it impossible for politicians who desire reelection to do the right thing here.
51%+ apparently want more of the same, even if the math suggests it is not sustainable over the long-term.
Watchtower,
My produce pun may be out of date.
Nah, you're good. In honor of Halloween, the puns are valid as long as children are still crying over spilled Milk Duds.
The next round of food puns comes when we're Fed wateryellen reserves under the bridge. Unfortunately, the daily monetary ZIRP rind is hard to stomach and the inside's just so darned seedy.
Fritz-O,
As people get more and more of something -- whatever it is -- each additional unit is of less and less value (except maybe for calories and heroin.) hahaha
I think this is also true of bad things.
Let's say I'd pay $10 to avoid 1 bee sting. Getting stung once therefore has a $10 negative value to me.
If I'd just been stung 49 times I'd definitely be willing to pay more than $10 to avoid being stung that 50th time though. It might kill me. The "value" of that 50th sting is worth far less to me. I could easily see myself pay $500 or more to avoid it.
I bring it up because I actually quit my job. The stress was turning into a hell hole. Each additional unit of stress was making it exponentially worse. 10 units of stress all at once is more than 10x as bad as one unit of stress.
It's been 14 years. Even when much of the stress was removed, I never fully recovered. It's like I have a new higher floor that defines my minimum. I totally get the post-traumatic stress disorder concept.
Starting in 1997, I bought my first house, $220k+ mortgage debt, got married, borrowed another $20k for her new car, racked up $50k in spending on the credit card (appliances, furniture, and so on), my employer was on the front page of the Wall Street Journal for fraud, there were many, many rounds of layoffs, my $1+ million project at work was cancelled (I was lead software engineer), got a divorce, an investment paid off big time (not all stress is bad), paid off the house, quit my job, dotcom stock market crash with no job to fall back on, dad died, and my dog slowly died of mouth cancer. Took just a few years for all that to happen.
Not looking for a repeat. At some point in the process, my doctor told me I needed to reduce stress. It was affecting my physical health. Go figure.
No regrets about quitting my job. Health problems vanished instantly. The only thing that saddens me about it is that I was lucky to be able to quit. It's a guilt thing. I feel really bad for those stuck in a job they grow to hate.
I don't have the resources to live the life of luxury by any stretch of the imagination. No complaints though. The rat race is not worth it. It's a rat maze and I'm not convinced there's much cheese left, especially as I look forward long-term. Sigh.
Troy,
Policy-wise, our problems aren't that hard to solve, just back-out all the policy mistakes we've made 1983-now.
But one man's mistake is another man's mealticket.
That man's mealticket needs a name.
The Leech Express
What can the modern and innovative FIRE economy do for you?
Um, drain my lifeblood the more I let it? I guess that's why it's called a bloodletting.
Bloodletting (or blood-letting) is the withdrawal of often small quantities of blood from a patient to cure or prevent illness and disease. Bloodletting was based on an ancient system of medicine in which blood and other bodily fluid were regarded as "humors" that had to remain in proper balance to maintain health. It was the most common medical practice performed by physicians from antiquity until the late 19th century, a span of almost 2,000 years.
What's the best solution for a bloodletting crisis? More bloodletting! Genius!
I don't have the resources to live the life of luxury
暇 is the kanji for "free time"
Doing as you will every day is the ultimate luxury.
As I say -- ad nauseam -- Wealth at its most elemental is the state of being "well":
wealth (uncountable)
1. (obsolete) Weal; welfare; prosperity; good; well-being; happiness; joy.
The beauty of the web is that it provides an immense amount of content for the cost of an internet connect.
And the beauty of computers is that they are wealth-creators that don't require input goods (other than ~1c/hr of 110V AC) to operate.
Now, just being a head in a vat doesn't sound that attractive to me, but it's scary how much time I've disposed of these past 15+ years being online.
"luxury" comes from the latin for "excess" apparently, so that sounds bad, but I've been perfectly happy the past few years dialing back my life and living on my existing wealth of stuff that I'd accumulated 2000-2010; the car, the PCs, the clothes.
Compared to what I had access to in the 1980s and 90s, all this stuff is in fact beyond the dreams of avarice. My crappy first-gen iPad has the power of a million Apple II+ computers!
I just searched for "slow life" and this result:
http://en.wikipedia.org/wiki/Slow_living
seems to get at it.
Troy,
Doing as you will every day is the ultimate luxury.
Yeah, I should have said that I don't have the means to live the traditional lifestyle of the rich and famous.
For what it is worth, I would not want that life anyway, especially if the Paparazzi was gettin' all up in my business. As a camera shy introvert, that would be much more of a nightmare than a dream. ;)
51%+ apparently want more of the same, even if the math suggests it is not sustainable over the long-term.
That would be 51%+ of people who actually participate in the political charade and select one of the two hustlers put forth.
I wonder what it would look like to chart presidential election voter turnout per capita?
Or presidential election voter remorse per capita?
But one man's mistake is another man's mealticket.
One man is Greenspan and another man is a Wall Street CEO.
The U.S. money supply rose 20% or more in 2003 and 2004, the fastest rate in 30 years. Greenspan was desperate to avoid a long, deflationary Japan-style slump. He avoided the slump, for awhile, but at the price of, well, you know.
Guess how much house prices rose in California during the same two years? Twenty percent per year, equal to the increase in money supply.
One thing I do understand is how the Fed's inflation of money supply ends up in central banks in Asia. How that suppresses consumer prices in America. And how this reduces our long-term competiveness.
Fritz_O,
Or presidential election voter remorse per capita?
How does one treat election remorse that lasts for more than 4 hours?
Ba dum tssshhh
Fritz_O,
Guess how much house prices rose in California during the same two years? Twenty percent per year, equal to the increase in money supply.
I think part of that might be illusionary. I know that house prices haven't done at all well historically during periods of hyperinflation. Too much money is diverted elsewhere (like food and fuel).
That said, if people believe that large increases in money supply will necessarily lead to large increases in house prices, then it can become a self-fulfilling prophecy up to and including the point that it falls apart again.
Just a thought.
Guess how much house prices rose in California during the same two years? Twenty percent per year, equal to the increase in money supply.
The 2001-2003 tax cuts got the appreciation train rolling, and mtg rates going from 8%+ to 5%+ also pushed up prices in response last decade.
What *really* pushed prices higher was the stated-income, I/O, and "negative amortization" loans that really gave buying power to specuvestors.
It got to the point that the market price level was literally being set by the greatest fool, strawberry pickers with $20,000 incomes buying $700,000 houses . . ..
What *really* pushed prices higher was...literally being set by the greatest fool...
All true, but my point was that the money had to be pushed into the system before the system could push the money into the fools. That the correlation was so similar was not, in my mind, co-incidence.
...house prices haven't done at all well historically during periods of hyperinflation. Too much money is diverted elsewhere (like food and fuel).
This could be true as well but...gas did not hit $2.00+ until 2004. And did nothing to slow rampant speculation.
And there were plenty of otherwise sensible folks who believed the snake-oil realtards who sold the "you'll be priced out forever if you don't buy now" line. They had an overpriced house to sell and bought another overpriced house. Many cashed out and "cashed in" with no mortgage involved.
Troy,
It got to the point that the market price level was literally being set by the greatest fool, strawberry pickers with $20,000 incomes buying $700,000 houses . . .
The math easily works for me if 35 strawberry pickers get together to live in that house.
You know what they say. Everyone needs a place to live, lol. Sigh.
Gallows humor.
Fritz_O,
This could be true as well but...gas did not hit $2.00+ until 2004. And did nothing to slow rampant speculation.
Perhaps the rising cost of gasoline was "proof" to some that all prices only go up.
Housing apocalypse prediction of hyperinflation and real estate values – Debunking the hyperinflation argument to purchase housing. Examining real estate in deflation, inflation, and hyperinflation.
In 1912-13 a typical German family was spending 30 percent on rent and 30 percent on food. The typical American family today spends roughly 40 percent on housing and 15 percent on food as a comparison. Yet as you can see from the data, housing is largely irrelevant once hyperinflation started taking a hold from 1915 to 1923. By 1923 this typical family was spending just 0.2 percent on rent while food consumed 91.6 percent of household expenses. Why does this occur? When you have a currency that is largely becoming worthless housing takes a back seat to more pressing expenses like food. We are clearly far away from a scenario like this in the U.S. but those who use hyperinflation as some kind of loophole for housing values largely miss the entire bigger picture should hyperinflation ever take hold (we have absolutely no evidence even remotely showing this of course).
^ ayup about housing and inflation.
The sticks and bricks is a sunk expense with no current cost of production.
This means it is tail-end charlie in getting on the inflation bandwagon -- people bid up the cost of housing AFTER more pressing demands on their income, which are generally ordered by:
1) withheld taxes & health insurance
2) food
3) gas to get to work
1970s inflation also hit housing last. My parents were renting a 3B apt in El Cerrito @ $300 1974-77 and a 3B house in Salinas @ $400 1977-81.
Prices went up 50% 1977-81, but the rent didn't -- the CPI militated against higher rents.
This is somewhat counter-intuitive, but also kinda obvious.
Troy,
1) withheld taxes & health insurance
2) food
3) gas to get to work
4) Tire Rental
Deep sigh.
Troy,
I saw one hyperinflation preparedness site tell me that I needed to have enough cash on hand to pay the property taxes on my "real estate" real asset store of value.
Property taxes only come around every 6 months for me. During hyperinflation how much cash would I need to have set aside? A million dollars? A billion? Yeah, I'll get right on that, lol. Sigh.
Forehead. Desk. Whack. Whack. Whack.
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