Friday, May 16, 2008

U.S. Economy: Housing Starts Up; Other Indicators Mixed

Consider This
by 3-Wood



Good news has just hit the wires about the construction numbers.

Expect most of the MSM to ignore this.

Housing starts surge on apartment construction: U.S. home builders broke ground on 8.2% more homes in April, led by a 36% increase in multi-family units, the Commerce Department estimated Friday."


The lower interest rates are probably starting to have their effect.
Remember that you have time lags in economics.

It will be another few months before you should see the ripple effect of this higher construction activity impact employment and income statistics.

Also:
"Building permits increased 4.9% in April to a seasonally adjusted annual rate of 978,000."

This is important as it signifies coming construction during the summer.


ANALYSIS

* Macro economically-speaking, the construction industry seems to be moving forward.

* At the same time the damage to the banking/finance sector has not fully run it's course, so that will somewhat counterbalance the construction industry growth.

* In addition, oil continues to climb and I see no slowdown in demand for oil yet. Therefore, I would not be surprised to see $140 to $150 a barrel oil before the summer is over.


All other things held equal, I expect to see the market trade sideways or a little up over the summer, and then begin to climb in the fall.

by 3-wood
image: Outraged Spleen of Zion
Source: Consider This by 3-Wood
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