by Calculated Risk on 12/17/2012 10:09:00 PM

Two more articles on the possible "fiscal cliff" deal:

From the NY Times: President Delivers a New Offer on the Fiscal Crisis to Boehner

The White House plan would permanently extend Bush-era tax cuts on incomes below $400,000, essentially meaning that only the top tax bracket, 35 percent, would rise to 39.6 percent.

The president’s plan would cut spending by $1.22 trillion over 10 years, an official said, $800 billion of it in programmatic cuts, and $122 billion by adopting a new measure of inflation that slows the growth of government benefits, especially Social Security.

From the WSJ: White House Revises Offer on Tax Rates in Deficit Talks

In President Barack Obama's latest budget proposal, the White House said it now would seek to raise tax rates on income above $400,000, a person familiar with the talks said. ...

In total, the plan would include $1.22 trillion in spending reductions, with $400 billion coming from changes to health-care programs, $200 billion from cuts to other mandatory spending programs, $100 billion in cuts coming from defense spending and another $100 billion coming from nondefense discretionary spending.

Tuesday economic releases:
• At 10:00 AM ET, The December NAHB Housing Market Index (HMI) survey will be released. The consensus is for a reading of 47, up from 46 in November. Although this index has been increasing sharply, any number below 50 still indicates that more builders view sales conditions as poor than good.

by Calculated Risk on 12/17/2012 07:32:00 PM

Ezra Klein at the WaPo WonkBlog wrote earlier today: A ‘fiscal cliff’ deal is near: Here are the details

Boehner offered to let tax rates rise for income over $1 million. The White House wanted to let tax rates rise for income over $250,000. The compromise will likely be somewhere in between. More revenue will come from limiting deductions, likely using some variant of the White House’s oft-proposed, oft-rejected idea for limiting itemized deductions to 28 percent. The total revenue raised by the two policies will likely be a bit north of $1 trillion. ...

On the spending side, the Democrats’ headline concession will be accepting chained-CPI, which is to say, accepting a cut to Social Security benefits.

Chained CPI is a relatively new series (started in 2002), and measures inflation at a slightly lower rate than CPI or CPI-W - and over time this would add up both for Social Security payments and also for revenue (tax brackets would increase slower using chained CPI than using currently).

From the BLS: Frequently Asked Questions about the Chained Consumer Price Index for All Urban Consumers (C-CPI-U)

Click on graph for larger image in graph gallery.

The graph shows the year-over-year change in headline CPI, CPI-W, and chained CPI.

There isn't much difference on a year-over-year basis, but notice the blue line is mostly below the other two all the time. Those small differences add up over time as the following table shows.

This table shows the 10 year change in each measure (from Nov 2002 to Nov 2012) and the annualized change over that period. If we were using chained CPI instead of CPI-W over the last 10 years, Social Security benefits would be about 3.6% lower than they are now.

	10 Year Increase	Annualized
CPI (headline)	27.0%	2.42%
CPI-W (current)	27.7%	2.48%
CPI (chained)	24.1%	2.19%

by Calculated Risk on 12/17/2012 04:26:00 PM

From economist Tom Lawler:

While most areas have experienced a significant decline in the foreclosure share (as well as the overall “distressed-sales” share of home sales this year, it’s sorta interesting to note that the all-cash share of homes purchases has not fallen, at least in areas where data on financing are available. E.g., here is a table showing the “all-cash” share of home purchases this November compared to last November in selected markets. All data are based on realtor association/MLS reports, save for the Southern California, which are Dataquick’s tabulations based on property/mortgage records. Also shown are the foreclosure and short-sales shares of home sales. Note that for Sothern California the foreclosure and short-sales shares are share of resales, while the all-cash share is the share of total sales. Note also that I don’t have the foreclosure and short sales shares for the Baltimore and DC metro areas, but only for the whole area covered by MRIS. However, the Baltimore and DC metro areas account for about 77% of total home sales through MRIS, so ...

While in most of these areas the foreclosure sales share of resales in November was down considerably from last November, as was the overall “distressed” sales shares, the all-cash-financed share of home sales was actually higher this November than last November in many areas, and in other areas it was little changed from a year ago. Most analysts (and realtors) believe that investors make up a substantial share of all-cash purchases. Given that the all-cash share of purchases is flat to higher while the foreclosure share of purchases is down considerably, it appears as if investors have considerably increased their purchases of non-foreclosure properties over the last year.

	All Cash Share		Foreclosure Share		Short-Sales Share
	Nov-12	Nov-11	Nov-12	Nov-11	Nov-12	Nov-11
Las Vegas	52.7%	48.2%	10.7%	46.0%	41.2%	26.8%
Phoenix	43.2%	45.4%	12.9%	29.8%	23.2%	29.6%
Sacramento	37.1%	27.4%	11.5%	34.3%	36.1%	29.8%
Orlando	54.0%	49.9%	20.9%	22.8%	29.0%	37.2%
Baltimore Metro	23.8%	23.8%
DC Metro	18.8%	20.4%
MRIS (Mid Atl)			8.7%	14.2%	11.9%	13.7%
Toledo	40.9%	38.2%
Southern CA	33.0%	29.5%	15.3%	31.6%	26.3%	24.9%

by Calculated Risk on 12/17/2012 01:42:00 PM

Towards the end of each year I collect some housing forecasts for the following year. Here was a summary of forecasts for 2012. Right now it looks like new home sales will be around 365 thousand this year, and total starts around 750 thousand or so.

Here is one without details, from Hui Shan, Sven Jari Stehn, Jan Hatzius at Goldman Sachs:

We project housing starts to continue to rise, reaching an annual rate of 1.0 million by the end of 2013 and 1.5 million by the end of 2016.

The table below shows several forecasts for 2013. 

From Fannie Mae: Housing Forecast: November 2012

From NAHB: Housing and Interest Rate Forecast, 11/29/2012 (excel)

I'll add some more forecasts soon:

Some Housing Forecasts for 2013
	New Home Sales (000s)	Single Family Starts (000s)	Total Starts (000s)	CS House Prices
Fannie Mae	452	659	936	1.6%1
NAHB	447	641	910
Wells Fargo	460	680	990	2.6%
Merrill Lynch	466		976	2.6%
2012 Estimate	365	525	750	6.0%
1FHFA Purchase-Only Index

by Calculated Risk on 12/17/2012 11:51:00 AM

Note: Clerical workers at the ports of Long Beach and Los Angeles went on strike starting Nov 27th and ending Dec 5th. The strike impacted port traffic for November, but traffic is expected to bounce back in December. The strike happened after the holiday shipping period, so the slowdown isn't expected to impact holiday related shopping.

I've been following port traffic for some time. Container traffic gives us an idea about the volume of goods being exported and imported - and possibly some hints about the trade report for November. LA area ports handle about 40% of the nation's container port traffic. Some of the LA traffic was routed to other ports, so this data might not be very useful this month.

The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).

To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average.

Click on graph for larger image.

On a rolling 12 month basis, both inbound and outbound traffic are down slightly compared to the 12 months ending in October.

In general, inbound and outbound traffic has been mostly moving sideways recently.

The 2nd graph is the monthly data (with a strong seasonal pattern for imports).

For the month of November, loaded outbound traffic was down 7.5% compared to November 2011, and loaded inbound traffic was down 3% compared to November 2011.

Usually imports peak in the July to October period as retailers import goods for the Christmas holiday, so some decline in November was expected.