Feb 27, 2019

Shutdown exacerbates December's U.S. home building decline

Data: Federal Reserve Bank of St. Louis; Chart: Chris Canipe/Axios

Data released Tuesday showed U.S. home building starts in December were the lowest since September 2016, and the 11.2% fall from November was the biggest one-month decline since January 2007.

Yes, but: U.S. building permits rose during the month, by 0.3%, meaning a sharp divergence between the number of actual building constructions started and the number of permits filed to build.

What they're saying: "The divergence ... reflects the December chaos around Federal Reserve interest and balance sheet policies, fearing new tariffs on imported construction materials, declining small business confidence and a federal government shut-down that damped new start enthusiasm," Steven Skancke, chief economic advisor at investment firm Keel Point, and a former Treasury Department official, tells Axios in an email.

Between the lines: The housing starts data collection was interrupted by the 35-day shutdown, which Skancke and others say can have a disproportionate negative impact.

  • Plus, U.S. interest rates rose through Q4, the stock market sold off and confidence among homebuilders suffered as did homebuilder stocks based on the NAHB index.

It was "the perfect storm," Bank of America Merrill Lynch's Global Research team said in a note. "The good news is that both have rebounded impressively since the start of the year. This sets up for a recovery in starts as builders feel better about their growth prospects."

  • Further, they said, the last time the gap between the two measures was this large was May 2015, "and starts rebounded sharply in the month following."

What to watch: "While we think the data will recover in the near term, it will still leave a further slowing in housing activity," BAML's analysts said.

The bottom line: "For a housing sector already assumed on shaky legs, this is alarming," said Jon Hill, interest rates strategist at BMO Capital Markets.

Go deeper: The mixed views on a housing market rebound

Go deeper

Trump plans to use Bernie as an economic scapegoat

Illustration: Aïda Amer/Axios. Photos: Zach Gibson/Stringer, The Washington Post/Getty Contributor

Bernie Sanders is poised to become an economic scapegoat for both the White House and Corporate America, assuming that Sanders comes through Super Tuesday unscathed.

The big picture: If the U.S. economy remains strong, President Trump and CEOs will claim credit (as they've been doing for three years). If it turns sour, they'll blame Bernie (even though it's a largely baseless charge).

Why big banks are breaking up with some fossil fuels

Illustration: Sarah Grillo/Axios

JPMorgan Chase is the latest financial giant to unveil new climate commitments, and like its peers, it is hard to disentangle how much is motivated by pressure, conscience or making a virtue of necessity.

Why it matters: The move comes as grassroots and shareholder activists are targeting the financial sector's fossil energy finance, especially amid federal inaction on climate.

Trump acknowledges lists of disloyal government officials to oust

Photo: Mandel Ngan/AFP via Getty Images

President Trump on Monday acknowledged the existence of assembled lists of government officials that his administration plans to oust and replace with trusted pro-Trump people, which were first reported by Axios' Jonathan Swan.

What he's saying: “I don’t think it's a big problem. I don’t think it's very many people,” Trump said during a press conference in India, adding he wants “people who are good for the country, loyal to the country.”