Non-Manufacturing Economy Still Growing; Budget Battle Coming Soon
- Feb 06, 2013
CoreLogic reported on Tuesday that home prices nationwide, including distressed sales, increased year over year by 8.3 percent in December 2012. The change is the largest increase since May 2006, and the tenth consecutive monthly increase by CoreLogic’s reckoning, which is a month fresher than Case-Shiller (which most recently reported prices as of November). On a month-over-month basis, including distressed sales, CoreLogic said that home prices increased by 0.4 percent in December 2012.
All but four states are experiencing year-over-year price gains, including distressed sales: Delaware (down 3.4 percent), Illinois (down 2.7 percent), New Jersey (down 0.9 percent) and Pennsylvania (down 0.5 percent). The states with the highest annual appreciation were Arizona (up 20.2 percent), Nevada (up 15.3 percent), Idaho (up 14.6 percent) and California (up 12.6 percent).
Excluding distressed sales, home prices increased by 7.5 percent in December 2012 compared to the same month in 2011. Only three states saw loses when distressed sales are taken out of the equation: Delaware (down 1.9 percent), Alabama (down 1 percent) and New Jersey (down 0.5 percent).
ISM: Non-Manufacturing Economy Still Growing
The Institute for Supply Management reported in its January 2013 Non-Manufacturing ISM Report on Business that U.S. economic activity in the non-manufacturing sector grew in January for the 37th consecutive month, though at a slightly slower pace. The organization’s Non-Manufacturing Index came in at 55.2 in January, down from 55.7 in December (50 and over means expansion).
The New Orders Index decreased by 3.9 percentage points to 54.4 percent, while the Employment Index increased 2.2 percentage points to 57.5 percent, pointing to growth in non-manufacturing business employment for the sixth consecutive month. The Non-Manufacturing Business Activity Index dropped to 56.4 percent, which is 4.4 percentage points lower than the 60.8 percent reported in December.
According to the ISM, eight non-manufacturing industries reported growth in January. “Respondents’ comments are mixed about the economy and business conditions; however, the majority of respondents are optimistic about the overall direction,” Anthony Nieves, chair of the ISM Non-Manufacturing Business Survey Committee, said in a statement.
Budget Battle Coming Soon
The first round of the Sequester Games got under way in Washington on Tuesday, with President Obama proposing a limited package of spending cuts and tax hikes to forestall sequestration, and his Republican opposition opposing the president’s proposal. Automatic cuts to the federal budget are slated to begin about a month from now. Defense spending seems to be of particular concern, not only because it involves defending the nation, but because defense cuts have already had a measurable impact on economic growth (such cuts were one of the factors pulling U.S. GDP down in the fourth quarter).
Lost in all the hubbub might be a report by the Congressional Office on Tuesday that estimated that the federal deficit will be 5.3 percent of GDP in 2013 (for the fiscal year ending Sept. 30), down from 7 percent in 2012. The nonpartisan agency further predicts that the deficit will be 3.7 percent of GDP in fiscal 2014 and 2.4 percent in fiscal ’15.
Wall Street bounced back from the Monday blues on Tuesday, with the Dow Jones Industrial Average up 99.22 points, or 0.71 percent, not quite to 14,000, but close. The S&P 500 gained 1.04 percent and the Nasdaq advanced 1.29 percent.