U.S. challenges China wind power aid at WTO

New Home Sales weak in November – The Census Bureau reports New Home Sales in November were at a seasonally adjusted annual rate (SAAR) of 290 thousand. This is up from a revised 275 thousand in October. The first graph shows monthly new home sales (NSA – Not Seasonally Adjusted or annualized). Note the Red columns for 2010. In November 2010, 21 thousand new homes were sold (NSA). This is a new record low for November. The previous record low for the month of November was 26 thousand in 1966 and 2009; the record high was 86 thousand in November 2005. The second graph shows New Home Sales vs. recessions since 1963. And another long term graph – this one for New Home Months of Supply. Months of supply decreased to 8.2 in November from 8.8 in October.  This is still high (less than 6 months supply is normal).  The final graph shows new home inventory.  The 290 thousand annual sales rate for November is just above the all time record low in August (274 thousand). This was the weakest November on record and below the consensus forecast of 300 thousand.
The Last Christmas in America As noted here many times before, the purchasing power of American wage-earners reached a plateau around 1973 and has been declining ever since. One key point which is usually overlooked when comparing "The Last Christmas in America" circa 1974 and TLCIA circa 2010: the wealth distribution in the U.S. was much flatter then. CEOs of financial institutions did not earn $10 million each; there were no hedge funds with chiefs pulling down $600 million each (yes, that was the average "compensation" for the top ten fund managers at the hedgies’ glorious peak), and even minimum wage ($1.60/hour in the late 60s, I know because my wage stub recorded it) bought far more goods (purchasing power) then than minimum wage does now. Not only was gasoline cheap, but housing was far and away cheaper than it is today. Just about any G.I./Vet could buy a house with his/her V.A. benefits (3% down), and anyone else could scrimp and save for a few years and then buy a house for 2 or 3 times their annual wage at an interest rate around 6%.

The year of living dangerously. Masters: “The stunning extremes we witnessed gives me concern that our climate is showing the early signs of instability” – Munich Re: "The only plausible explanation for the rise in weather-related catastrophes is climate change" – A year of deadly record-smashing weather extremes from Nashville to Moscow, from the Amazon to Pakistan, ended with staggering deluges from California — “Rainfall records weren’t just broken, they were obliterated” — to Australia: More than a year’s rain fell in Carnarvon in just 24 hours this week.  A monsoonal low hovering over the Gascoyne dumped a 24-hour record 204.8mm, smashing the previous record of 119.4mm set on March 24, 1923. NASA reported that it was the hottest ‘meteorological year’ [December to November] on record and likely to be the hottest calendar year. Uber-meteorologist and former NOAA Hurricane hunter Dr. Jeff Masters of Weather Underground reported, “The year 2010 now has the most national extreme heat records for a single year–nineteen. These nations comprise 20% of the total land area of Earth. This is the largest area of Earth’s surface to experience all-time record high temperatures in any single year in the historical record.”
Yves Smith on foreclosures (video interview)

The balance sheet recession – Mark Thoma has a good piece up on at the Fiscal Times about why the particular causes of this recession have led to a slow recovery: Recessions can occur for a variety of reasons…One way to distinguish recessions is through differences in their effects on balance sheets, in particular those of households and banks. For households, the collapse of a housing bubble, which also tends to cause a stock market crash, results in a decline in home equity as well as the loss of retirement and education savings. Monetary policy can help us recover in a recession like this by increasing nominal asset and income values relative to average debt, some portion of which is nominally fixed. But cleaning up household balance sheets while unemployment remains high is difficult. I don’t see any good way to do this, but as Mark points out banks have repaired their balance sheets, and if there was a good way for some of that wealth to be transferred to households with poor balance sheets I think it would help the recovery. The only thing that comes close to that is mortgage cramdowns, which I am not optimistic could be done without lots of unintended consequences.
A strange model of the economy, ctd – Ryan Avent at the Economist explains much more clearly than I the wrongness of the claim that low population growth will make us better off: The point concerning government spending is simply bizarre. Projected growth in federal spending is largely due to rising spending on entitlements, especially Medicare and Medicaid. Slower population growth isn’t going to limit this spending growth; it will just increase the dependency ratio and the expected per capita burden of taxation…. Also in the comments Andy Harless tries to provide an explanation for what Johnson may be thinking: (1) fewer immigrants mean less competition for jobs in the short run (assuming immigrants don’t create enough domestic demand to support their employment), and (2) fewer children mean less drain on governments. Of course fewer children do also mean less demand and therefore fewer jobs, but this is obviously endogenous: all the first argument is really saying is that it’s a good thing people aren’t dumb enough to keep coming to the US when there are no jobs.


U.S. challenges China wind power aid at WTO (Reuters) – The United States on Wednesday accused China of illegally subsidizing the production of wind power equipment and asked for talks at the World Trade Organization, the first step in filing a trade case.

U.S. trade officials said they were concerned Chinese manufacturers of wind turbines and related parts and components could have received several hundred million dollars in questionable government grants in 2008 under China’s Special Fund for Wind Power Manufacturing. They said the grants appeared to violate WTO rules by requiring Chinese manufacturers to use only Chinese-made parts and components. U.S. wind turbine manufacturers such as General Electric and United Technologies are eager to compete in China’s fast-growing market, although the United Steelworkers union was the driving force behind the case.

How Long Is Each State’s Unemployment Extension? –  Last week Congress approved an extension of a program to provide unemployment benefits for up to 99 weeks, but there’s a wide variance in how long an unemployed person can receive benefits depending on their state.  During the recession, Congress created a program allowing up to 99 weeks of unemployment benefits backed by the federal government — an addition of 73 weeks to the traditional 26 offered by the states. The duration varies from state to state, based on how bad the unemployment situation is in the region. There are three main levels to unemployment insurance right now: state benefits, federal emergency unemployment compensation and joint state-federal extended benefits. The basic state benefits are usually 26 weeks and are unaffected by the federal program. When that time is up, the EUC program offers benefits in four tiers. Tier 1 (20 weeks) and tier 2 (14 weeks) are available in all states. Tier 3 (13 weeks) and tier 4 (6 weeks) are only available in states with higher unemployment rates, with 47 states and Washington DC qualifying for tier 3 and 25 states and Washington DC allowed to take part in tier 4. When EUC expires, some states offer either 13 or 20 weeks of extended benefits beyond that point.The following chart shows how many weeks are available in each state, according to the latest data from the Department of Labor.
4th quarter Real GDP – With the release of the November data on real personal consumption expenditures it looks like real PCE growth in the fourth quarter will be over 4% (SAAR) as compared to growth rates of 0.9%, 1.9%,2.2% and 2.8% over the last four quarters, respectively. October real PCE increased 0.5% and November was up 0.3%. So if December is only up only o.1% the fourth quarter real PCE growth rate would be 4.1%. This would be the strongest growth in real PCE since the first quarter of 2006. You can make your own guesses about the other component of real GDP but it now looks like fourth quarter growth will exceed almost everyone’s expectations.


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