Perspectives Blog

What’s behind the weakness in U.S. housing?

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | March 24, 2014

…er will improve, the latter conditions will not. There is some evidence of a two-tiered market as well, with most of the slowing seen in the single-family sector against a firmer multi-family segment, particularly in new home construction. Over the last year there has been a marked slowing in single-family permits and single-family starts across all regions, not just those areas suffering through a miserable winter. The reduced pace of constructi…

Snow job!

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | January 13, 2014

…, but the majority came from retail (+55k) and temp help (+40k), areas noted for low wages. Outside of these two sectors, payroll counts were weaker across a broad number of industries—either smaller gains or outright losses. Construction shed 16k jobs while information/telecom shed 12k. Professional and business services added only 19k, despite the strong rise in temp hiring, due to a 25k decline in accounting and bookkeeping services. The publi…

Rebalancing the U.S. economy

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | January 13, 2014

…e capital, not return it to shareholders in the form of dividends. This capital deepening can begin to close the output gap and is probably what the markets are counting on. We are beginning to see some lift in private sector construction spending on offices, commercial space and manufacturing plants (see chart 2). Private sector construction Source: Census Bureau, November 2013   Consumers (70% of growth) appear a bit hamstrung. Spending h…

How much and how fast?

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | August 29, 2013

…d and material costs are high and supplies are low). New home inventories have started to build, rising from a low of 3.9 months in January of this year to 5.2 months in July. But a higher percentage than normal remain “under construction.” Completed home inventories remain quite low, about 10 percentage points below average, so supplies are still relatively tight. Second, relentless home price increases are beginning to impact demand, particular…

How bad is China’s credit crisis?

Weili Jasmine Huang, Senior Portfolio Manager | February 3, 2014

…o implement some reforms, there will be no easy or immediate fix. Reform efforts to fundamentally adjust spending responsibility between central and local government (allowing private capital to invest in urban infrastructure construction, allowing bond issuance and setting up local government balance sheets to improve transparency) will help resolve many of the issues surrounding LGFVs. Nevertheless, a sense of urgency regarding reform implement…

Income inequality, disinflation and profit growth – the role of globalization

March 10, 2014

…he latter. So, for example, Apple reaps the majority of the profits from iPhone sales even though China has a virtual monopoly on the assembly and export of iPhones, together with the bulk of the low wage jobs attached to its construction*. And so when we look at profitability trends in U.S. national accounts data, we can see that while domestic non-financial profits are around 7.3% of gross domestic product (GDP) — around 1.6% above their long-t…

Steady as she goes

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | April 7, 2014

…ay have been due to weather, but I would point to payback from the inventory swing. Gains were at or slightly above trend in professional/business services with about half from temporary jobs. Solid gains were seen in retail, construction, and healthcare. Leisure and hospitality was a little light, with restaurant hiring strong—indicative of a pickup in part-time jobs. Public sector continues to be a drag with cuts at both federal and state &…