By Dees Stribling, Contributing Editor
The residential market continued to be the main domestic economic story on Tuesday, with the Census Bureau and HUD reporting that housing starts in February were at an annualized rate of 698,000 units, a dip of 1.1 percent from January. Last month’s total, which had been revised from 699,000 to 706,000, which was a three-year high (partially out of the basement, in other words). Compared with February 2011, last month’s total was 16.7 percent higher.
The drop was attributable to single-family starts, which came in at an annualized rate of 457,000 units, or 9.9 percent less than in January. The February rate for multi-family starts was an annualized 241,000 units, some 21.1 percent higher than during January, showing its typical volatility.
Residential permitting, on the other hand, was a different and more optimistic story. Nationwide, permitting was up 5.1 percent month-over-month to an annualized rate of 717,000 units, the most since October 2008, after which permitting fell through the floor. Moreover, February saw an even-handed gain, with single-family permits up 4.9 percent to an annualized 472,000 units, and multi-family permits gaining 5.6 percent to 245,000 annualized units. For multi-family, times are bountiful — that’s the highest permitting since October 2008 as well.
Bernanke Takes to the Classroom
Ben Bernanke did something unusual and somewhat PR-like on Tuesday, delivering the first of a four-part lecture series on the Federal Reserve and troubles beginning with the Credit Freeze of 2007. (On Wednesday, he’s back before Congress again.) The lectures are being offered as part of an undergraduate course at the George Washington University School of Business. The first one is, “Origins and Mission of the Federal Reserve.” It might also have an unspoken subtitle: “I can’t believe a presidential candidate who consistently polls about 10 percent wants to abolish the Fed.”
The chairman discussed the basics of central banking, and how central banks emerged in modern times to prevent, or at least mitigate, financial panics by being a lender of last resort, among other functions. For the most part, that material was Economics 101 (or perhaps Government 101), on which most of the modern world agrees on (except for that 10 percent).
Bernanke isn’t one to show exasperation, but perhaps there was more than a hint of exasperation in a long section of the lecture on the gold standard, with its unspoken subtitle: “I thought this matter was settled decades ago.” The chairman didn’t go as far as to call gold a “barbaric relic,” but he did point out that under a gold standard, the money supply is rigid; countries are forced to maintain fixed exchange rates; gold is subject to speculation, no matter what the official rate; and that it didn’t work that well in the late 1800s and early 1900s anyway, when the world suffered the now-forgotten panics of 1873, 1884, 1890, 1893, 1907, 1914 and of course the all-too-remembered granddaddy panic of them all, starting in 1929.
Greeks Formally Approve Bailout
Last week was a little strange in that there was no disquieting economic news from Europe, and on Tuesday (Wednesday morning on the shores of the Mediterranean) the Greek parliament voted to approve its part on the harsh bailout deal. The vote, 213 ayes, 79 nays, eight abstentions, was something of a quiet anticlimax. But then again, the country will hold elections next month, which should be anything but quiet.
Wall Street stared down on Tuesday, rattled by news that China might not be the engine of growth it once was, but partly made its way back by the end of the day. The Dow Jones Industrial Average lost 68.94 points, or 0.52 percent, while the S&P 500 was down 0.3 percent and the Nasdaq went negative by 0.14 percent.