The Bloomberg Spin on Housing Starts

Bloomberg is consistently spinning economic indicators. Today's headline, U.S. Economy: Single-Family Home Starts Rise for Fifth Month.

Thank God for the Internets, because these days, you can check the Press releases for yourself.

Single-family housing starts in July were at a rate of 490,000; this is 1.7 percent (±7.1%)* above the revised June figure of 482,000. The July rate for units in buildings with five units or more was 80,000.

Ok, firstly 1.7% isn't that much but the biggest thing here is the margin of error, 7.1%! And that asterisk?

* 90% confidence interval includes zero. The Census Bureau does not have sufficient statistical evidence to conclude that the actual change is different from zero.

Consistently now Bloomberg has been using article titles as economic cheerleader tools.

Calculated Risk puts it a little more in perspective, Housing Starts flat in July:

Single-family starts were at 490 thousand (SAAR) in July, up slightly from June; 37 percent above the record low in January and February (357 thousand).

Permits for single-family units were 458 thousand in July, suggesting single-family starts might decline slightly in August.

housing starts July 2009, Calculated Risk
Src: Calculated Risk, click on image to enlarge

So as one can see from CR's graph, there is a dead cat bounce on housing starts, but in terms of this months data, it's not much of a statistical change.

From the U.S. Commerce Department release:

Privately-owned housing units authorized by building permits in July were at a seasonally adjusted annual rate of 560,000.

This is 1.8 percent (±1.4%) below the revised June rate of 570,000 and is 39.4 percent (±1.8%) below the July 2008 estimate of 924,000.

There is also excess inventory, so while it's clear there is a bottom forming, today's numbers and projections don't imply the housing bubble is magically reappearing anytime soon (along with that bubble contribution to GDP).

Anyone else getting sick of Bloomberg's cherry picking for the one line of good news in these economic indicator press releases to use for their article titles?

EconPic is cheerleading the housing starts report, but not for the same reasons Bloomberg is.

In other words, why build something we don't need? The lower the level of housing starts, the faster we work off this excess inventory.

Subject Meta: 

Forum Categories: 

Bloomberg and rest of traditional media

know that people usually read the first couple lines of a story and move on. Gloomy readers are bad for business. - Financial Information for the Rest of Us.

reminds me of

that entire culture, where let's say you're getting royally screwed somewhere....someone will tell you to smile, be polite, don't react, most of all do not express any anger...for you don't want to burn your bridges or alienate someone, (God forbid!) or even worse, some sort of philosophy out there believing the economy is psychological, therefore one must promote belief in order to boost that consumer economy.

Well, the reality is the consumer economy is over! They tapped it out plus put everyone and the nation in debt for decades. What we need is a production economy, what we need is good jobs, massive increases in income, paychecks, wages. We need to make things, not just consume things.

Psychological Recession

I think that was the opinion of Phil Gramm, husband of the former CFTC Chair Wendy Gramm. So we can possibly hope the reason commodity prices are inflated is psychological, and we'll feel better in the morning. If I am not mistaken, he once held the senate seat that was held by Ralph Yarborough, who is turning over in this grave.
Sell you a t-shirt with a political slogan, mister?
Frank T.

Frank T.


This is all a massive conspiracy by the evil NAR! And Bloomberg is guilty of it too! They're always trying to keep the jam away from the little guy.

new home stats

I think Mr Oak makes some interesting points...I wrote a post today at about the new home stats and pointed out that something to remember is all the numbers above are “seasonally adjusted” annual rates and the year over year comparisons are just comparing the numbers for July 2009 versus July 2008. Another way to take a look at where things stand would simply be the year to date data, actual numbers and not seasonally adjusted, compared to last years ytd numbers at this same time. I think this may give a little better comparison so those numbers are below:

Through July 2009 there have been 248,900 permits issued for new homes compared with 387,400 this time last year for a decline of over 35%.
Through July 2009 there have been 250,400 new homes started compared with 415,700 this time last year for a decline of 39.8%.
There have been 285,400 new homes completed through July 2009, compared with 479,500 this time last year for a decline of 40.5%
So, while the current trend, based upon seasonally adjusted numbers is upward, as you can see the new home market so far this year is way off from last year and last year was not good. Having said this, even though I feel for everyone affected by the downturn in construction, from the standpoint of the real estate market, I think this is necessary. We have an excessive inventory of new and existing homes on the market so there is no point adding to it substantially at this point. We need to let the sales numbers continue to increase, get the foreclosure rate out of high gear and let the inventory fall to a number that is more appropriate for the market demand. Then, and only then, do I think we want to see significant increases in new home construction.