After December In Housing, No Miracle

by Jeffrey P. Snider

While there are those who saw October and more so November spikes in real estate and housing estimates as the beginning of the something big, all the December 2017 statistics suggest nothing more than the easily anticipated hurricane anomalies. Housing construction was back in line with weaker earlier 2017 estimates (particularly starts), while resales were, too. Today we found that sales of newly constructed homes also pulled back last month after a run in November.

The prior month’s big jump was revised to a seasonally-adjusted annual rate of 689k, well above the 599k posted in October. The estimate for December was 625k, just above the 6-month average.

The November figure was widely hailed as some kind of meaningful milestone simply because it was the most sales since August 2017. The media loves to write stories that contain the phrase “highest in ten years.”

This is not to say that the housing market isn’t growing; it is. Nor is it exhibiting any warning signs that it is close or about to collapse; it isn’t. The issue here is the same as it is for the overall economy, which is what matters as to whether November’s increase was the start of something bigger, or an aberration leaving the real estate market in the same shape as before.

In other words, anything that has been written about home construction making it seem like a positive is totally overwhelmed by the chart above. In December 2017, the Census Bureau figures that 43k (unadjusted) newly built homes were sold across the United States. That’s fewer than were turned over in December 1995 (45k), or December 1985 for that matter (47k).

As noted yesterday, there is a big problem in housing as it relates to the economy given this shrunken state. It’s far too consistent with the non-full employment view of circumstances. If things are really improving as is always claimed and characterized, then home sales would be brisk, as would resales.

The latter are not because they are being held back by a serious and sustained reluctance of home owners to sell. What we find here in new home sales is that reticence is obviously shared among buyers, too, particularly at the lower end starter homes.

Like shrinking available-for-sale inventory, the permanently reduced market for new homes isn’t really a mystery. If you ignore, as Economists do, the millions upon millions (as many as 16 or more) of Americans who don’t count for the unemployment rate, none of this makes sense given the “exceptional” job market that one statistic might indicate. Factor them into your economic equation, however, and your interpretation, and therefore outlook, changes dramatically.

Given that, it wasn’t ever very likely that October and November represented the start of something meaningfully different. That would have been just too far of a leap, to get to rapid growth finally after a decade of truly stunning shrinking and stagnation, and for what legitimate reason? In truth, it would have been a miracle, a verdict that I think will be applied to a lot more than the housing statistics in the months to come.

NAR Warns Upper-End Home Prices Set To Slide


Following the plunge in New- and Existing-Home Sales, expectations for a 0.5% acceleration in Pending Home Sales in December were met.

 

However, YoY, Pending Home Sales NSA dropped 1.8%.

 

The Northeast dominated the weakness (after a big jump in Nov):

  • Northeast fell 5.1%; Nov. rose 4.1%
  • Midwest fell 0.3%; Nov. fell 0.1%
  • South up 2.6%; Nov. rose 0.1%
  • West up 1.5%; Nov. fell 2%

 

Since the start of the year, Housing-related data has disappointed notably, after ramping remarkably since the storms…

Lawrence Yun, NAR chief economist, says pending sales edged up in December and reached their highest level since last March (111.3).

“Another month of modest increases in contract activity is evidence that the housing market has a small trace of momentum at the start of 2018,” he said. “Jobs are plentiful, wages are finally climbing and the prospect of higher mortgage rates are perhaps encouraging more aspiring buyers to begin their search now.”

Added Yun,

“Sadly, these positive indicators may not lead to a stronger sales pace. Buyers throughout the country continue to be hamstrung by record low supply levels that are pushing up prices — especially at the lower end of the market.” oops “In the short term, the larger paychecks most households will see from the tax cuts may give prospective buyers the ability to save for a larger down payment this year, and the healthy labor economy and job market will continue to boost demand,” said Yun.

“However, there’s no doubt the nation’s most expensive markets with high property taxes are going to be adversely impacted by the tax law.”

However, Yun ended on an ominous note…

“Just how severe is still uncertain, but with homeownership now less incentivized in the tax code, sellers in the upper end of the market may have to adjust their price expectations if they want to trade down or move to less expensive areas. This could in turn lead to both a decrease in sales and home values.”

Tesla Tumbles On Further Model 3 Delays

Elon Musk’s week just got worse as Tesla’s share tumble after CNBC reports the problems with battery production at the company’s Gigafactory in Sparks, Nevada, are worse than the company has acknowledged and could cause further delays and quality issues for the new Model 3, according to a number of current and former Tesla employees.

These problems include Tesla needing to make some of the batteries by hand and borrowing scores of employees from one of its suppliers to help with this manual assembly, said these people.

The reaction was instant and lower…

CNBC goes to report that more than a month after Musk’s initial warnings, in mid-December, Tesla was still making its Model 3 batteries partly by hand, according to current engineers and ex-Tesla employees who worked at the Gigafactory in recent months.

They say Tesla had to “borrow” scores of employees from Panasonic, which is a partner in the Gigafactory and supplies lithium-ion battery cells, to help with this manual assembly.

Cutting a Hole in the 4th Amendment

 

Hidden beneath the controversy stirred up last week by the publication of a book called “Fire and Fury,” a highly critical insider’s view of the Trump White House that the president has not only denounced on national television but also tried to prevent from being published and distributed, are the efforts of the Trump administration and congressional leadership to bypass the Fourth Amendment to the Constitution.

Here is the back story.

After the excesses of the Watergate era, during which the Nixon administration used the FBI and the CIA unlawfully to spy without warrants on the president’s real and imagined domestic political opponents, Congress passed the Foreign Intelligence Surveillance Act. FISA prohibited all domestic surveillance except that which is pursuant to warrants signed by federal judges.

The Fourth Amendment — which guarantees privacy in our persons, houses, papers and effects — permits the government to invade that privacy only when a judge has signed a warrant that authorizes surveillance, a search or a seizure. And judges may only issue warrants when they have found probable cause to believe that the government surveillance or invasion of the target’s privacy will produce evidence of criminal behavior. The Fourth Amendment further requires that the judicial warrant describe specifically the place to be searched or the person or thing to be seized.

All these requirements are in the amendment so as to prevent any court from issuing general warrants. Before the Constitution, general warrants were issued by British courts that met in secret in London. They were not issued based on probable cause of crime but issued based on the government’s wish to invade the privacy of all Americans living in the Colonies to find the more rebellious among them. This was the king and Parliament’s version of protecting national security.

General warrants did not describe the place to be searched or the person or thing to be seized. They authorized the bearer — usually a British soldier physically located in the Colonies — to search where he wished and seize whatever he found.

FISA did not interfere with the standard understanding or use of the Fourth Amendment by the government and the courts. But it did add another way for the government to invade privacy when its wish is to surveil people for national security purposes — a return to general warrants — as opposed to solely gathering evidence of crimes.

The FISA-created procedure, enacted in defiance of the Fourth Amendment — which makes no distinction between government evidence gathering and government intelligence-gathering — permits a secret court in Washington to issue general warrants based on the government’s need to gather intelligence about national security from foreigners among us. It pretends that the standard is probable cause of foreign agency, but this has now morphed into the issuance of general warrants whenever the government wants them.

Since 1977, the Foreign Intelligence Surveillance Court has issued well over 99 percent of the warrants that the government has requested. And these warrants do not specifically describe the place to be searched or the person or thing to be seized. A typical FISC-issued warrant authorizes government surveillance on all landlines, mobile devices and desktop computers in a given area or ZIP code. One infamous FISC-issued search warrant permitted the feds to surveil all Verizon customers in the U.S. — in excess of 115 million people — without any evidence of crime or even suspicion about any of them.

Now back to the Trump administration’s work below the radar. Even in the fresh aftermath of 9/11, when the government’s respect for constitutional norms was at a lamentably low point, the government interpreted the Fourth Amendment as requiring the government to separate its intelligence functions from its law enforcement work. The government recognized that its trigger for mass surveillance — namely, looking for a foreign agent among the populace — was a far lower standard than probable cause of crime, which is what the Fourth Amendment requires.

Today, the federal government’s computers are permanently connected to the mainframes of all telecoms and computer service providers in America, so the spying is in real time. Today, the federal government employs more than 60,000 domestic spies — one spy for every 5,500 Americans. Today, if any of them come across evidence of crimes while listening to your telephone calls or reading your texts or emails ostensibly for intelligence purposes, there is little they can do about it.

Until now.

Now, hidden beneath the “Fire and Fury” controversy is the muffled sound of the Trump administration and Republican congressional leaders plotting the enactment of an addition to FISA that would permit the use of evidence of crimes in federal court even when it is discovered during mass surveillance authorized by general warrants.

If enacted, this radical, unconstitutional hole in the Fourth Amendment would bring the country full circle back to the government’s use of general warrants to harass and prosecute — general warrants so odious to our forebears that they took up arms against the king’s soldiers to be rid of them.

I am surprised that President Donald Trump supports this. He has himself been the target of unlawful foreign surveillance and unconstitutional FISC-authorized domestic surveillance. “Fire and Fury” even quotes former British Prime Minister Tony Blair warning a newly elected Trump about this. And now he wants to unleash upon us all the voracious appetite for surveillance that was unleashed upon him and prosecute us for what is found, the Constitution be damned.

Whatever happened to the public promise to preserve, protect and defend the Constitution as it is written? That’s in the oath all in government have taken. That is the oath that the president and his Republican allies reject.

Are You One Of The 170 Million Americans Drinking Radioactive Tap Water?

According to a new bombshell report from the Environmental Working Group (EWG), tap water for more than 170 million Americans contains radioactive elements that may increase the risk of cancer. The group examined 50,000 public water systems throughout the United States and found from 2010 to 2015, more than 22,000 water utilities reported radium in treated water.

Radiation in tap water poses serious health threats, particularly for children, and women during pregnancy.

The most common radioactive element the EWG found was radium. Studies show that radium above the EPA legal limit may cause depression of the immune system, anemia, cataracts, fractured teeth, and of course cancer.

Radium is a naturally occurring radioactive element that resides on the earth’s crust. The EWG emphasizes that higher radium levels in tap water occur when uranium mining or oil and gas drilling exploration companies disturb the earth’s geology. The process triggers radiation called “ionizing because it can release electrons from atoms and molecules, and turn them into ions,” explained the EWG. The EPA warns that all ionizing radiation is carcinogenic, implying that radium above the EPA limit is all too prevalent in America and it could be causing lots of cancer.

In 158 public water systems serving some 276,000 Americans in 27 states, the EWG found that radium exceeded the federal legal ceiling for radium-226 and radium-228.

The EWG’s Tap Water Database covers six radioactive contaminants, including radium, radon, and uranium. The database shows radium-226 and radium-228 are the two most common forms of radiation in every state.

The EWG expresses frustration with the 41-year old federal drinking water standards that are not designed to protect human health. New public health goals were set in 2006 by the California Office of Environmental Hazard Assessment, but have been widely overlooked by the federal government.

Federal drinking water standards are based on the cost and feasibility of removing contaminants, not scientific determinations of what is necessary to fully protect human health. And like many EPA tap water standards, the radium limits are based on decades-old research rather than the latest science.

The EPA’s tap water limits on the combined level of the radium isotopes and the combined level of alpha and beta particles were set in 1976. They were retained in 2000, when the uranium standard was established.

To more accurately assess the current threat of radiation in U.S. tap water, we compared levels of the contaminants detected by local utilities not to the EPA’s 41-year-old legal limits, but to the public health goals set in 2006 by the respected and influential California Office of Environmental Hazard Assessment.

California public health goals are not legally enforceable limits, but guidelines for levels of contaminants that pose only a minimal risk – usually defined as no more than one expected case of cancer in every million people who drink the water for a lifetime.

California standards are hundreds of times more stringent than the current EPA limits for radium-226 and radium-228. If the federal government adopted the new tests, it would mean that no more than one case of cancer per million people per water supply. That would likely cause a public health emergency across the United States, but apparently, that is something the government has no intentions in doing in the intermediate time. So, for now, Americans will enjoy a higher risk of cancer one glass of water at a time, because, perhaps, cancer is very profitable for pharmaceutical companies, or the country is just flat broke and cannot afford new infrastructure.

“Most radioactive elements in tap water come from natural sources, but that doesn’t take away the need to protect people through stronger standards and better water treatment,” Olga Naidenko, senior science adviser at EWG, said in a statement.

“Millions of Americans are drinking water with potentially harmful levels of radioactive elements, but the outdated federal standards mean many people don’t know about the risk they face when they turn on the tap.”

Radium contamination in public water systems nationwide:

Radium concentrations in drinking water are drawn from EWG’s Tap Water database, and represent the average of all samples of treated drinking water collected from 2010 to 2015 for each water system. Samples reported as non-detections are entered as zero, which could underestimate the actual radium concentration in drinking water.

Federal drinking water regulations set a Maximum Contaminant Level, an enforceable legal standard, of 5 picocuries per liter (pCi/L) for the combined level of two isotopes of radium: radium-226 and radium-228. Some water utilities and states report individual levels of these isotopes, while others report a single combined radium value of a specific sample. When the combined level was not reported by the water utility, EWG added measurements of radium-226 and radium–228 to calculate it, as available.

This map displays radium data for 1,850 community water systems serving more than 10,000 customers, and 1,620 community water systems serving between 3,301 and 10,000 customers. The water system locations were mapped based on the Environmental Protection Agency’s Safe Drinking Water Information System, or SDWIS. Locations are approximate and are meant to visualize the general area served by a specific water system – not to give the specific address of the water treatment plant. The map does not include water systems that did not detect radium between 2010 and 2015. It also does not include those water systems for which EWG could not confirm geographic locations.

Click here for interactive version.

On the map, dots indicating water system locations are color-coded according to the combined radium levels. Dot size reflects the water system’s size of above or below 100,000 customers. Any changes in water sources and treatment, and water quality after 2015, are not reflected in EWG’s analysis. For more detail on data reporting methods for EWG’s Tap Water Database, read our Methodology.

Credit Card Debt Hits All Time High As Consumers Unleash Historic Shopping Spree

It’s official: the reason behind the recent rebound in the economy can be explained with two words: “charge it.”

Readers may recall that one month ago, we reported that with Republicans in Washington on the verge of passing their first major piece of legislation in the form of comprehensive tax cuts that will allow Americans across the income spectrum to keep a little more of their hard earned cash in 2018, it appeared that U.S. consumers already “pre-spent” their savings using their credit cards.

And now we have confirmation that this is precisely what happened, because in the month of November, between revolving, or credit card, and non-revolving debt, largely student and auto loans, according to the latest Fed data, total consumer debt rose by $28 billion, or the most since November 2001, to $3.827 trillion, an annualized increase of 8.8%, or roughly 4 times faster than the pace of overall GDP growth.

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Broken down, consumer credit rose by $11.2 billion in revolving credit, or credit card debt, which pushed it a record $1.023 trillion, the highest credit card amount outstanding on record. This was also the second highest monthly increase in credit card debt on record.

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Meanwhile, non-revolving credit – or auto and student loans – rose by $16.8 trillion to $2.805 trillion. Nonrevolving lending to consumers by the Federal government, which is mainly student loans, rose to $1.142t, on a non-seasonally adjusted basis.

This was to be expected: as we showed last month, US consumers appear to be tapping out, and as a result, the Personal savings rate dropped to 2.9%, the lowest since November 2007.

So, in addition to all the usual holiday trinkets that US consumers buy year after year, what hot new Christmas gadget has Americans suddenly willing to max out their credit cards?  Well, if Google search trends are any clue, it might not be a gadget, or anything tangible for that matter, at all.

Tesla Bonds Tumble – Now ‘Riskier’ Than Indonesia

After missing expectations for Model 3 deliveries (by 50%), delaying production goals once again, it appears the bond market is starting to give up on Elon Musk’s dreams for Tesla’s future.

While stocks are rebounding, bonds are not…

 

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In fact, Tesla’s 2025 bond – now dramatically below par – suffered its biggest drop yet today, heading back to lows on price…

 

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And for those who see Tesla’s juicy 6.13% yield and feel like “reaching” for it… may we suggest Indonesia instead…

 

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How long before Musk starts to discuss “Blockchain” implementations in Tesla’s product plan?

Why the U.S. Spends So Much More Than Other Nations on Health Care (Monopoly)

Studies point to a simple reason, the prices, not to the amount of care. And lowering prices would upset a lot of people in the health industry.

Image
CreditEvan Cohen

The United States spends almost twice as much on health care, as a percentage of its economy, as other advanced industrialized countries — totaling $3.3 trillion, or 17.9 percent of gross domestic product in 2016.

But a few decades ago American health care spending was much closer to that of peer nations.

What happened?

A large part of the answer can be found in the title of a 2003 paper in Health Affairs by the Princeton University health economist Uwe Reinhardt: “It’s the prices, stupid.

The study, also written by Gerard Anderson, Peter Hussey and Varduhi Petrosyan, found that people in the United States typically use about the same amount of health care as people in other wealthy countries do, but pay a lot more for it.

Ashish Jha, a physician with the Harvard T.H. Chan School of Public Health and the director of the Harvard Global Health Institute, studies how health systems from various countries compare in terms of prices and health care use. “What was true in 2003 remains so today,” he said. “The U.S. just isn’t that different from other developed countries in how much health care we use. It is very different in how much we pay for it.”

A recent study in JAMA by scholars from the Institute for Health Metrics and Evaluation in Seattle and the U.C.L.A. David Geffen School of Medicine also points to prices as a likely culprit. Their study spanned 1996 to 2013 and analyzed U.S. personal health spending by the size of the population; its age; and the amount of disease present in it.

They also examined how much health care we use in terms of such things as doctor visits, days in the hospital and prescriptions. They looked at what happens during those visits and hospital stays (called care intensity), combined with the price of that care.

The researchers looked at the breakdown for 155 different health conditions separately. Since their data included only personal health care spending, it did not account for spending in the health sector not directly attributed to care of patients, like hospital construction and administrative costs connected to running Medicaid and Medicaid.

Over all, the researchers found that American personal health spending grew by about $930 billion between 1996 and 2013, from $1.2 trillion to $2.1 trillion (amounts adjusted for inflation). This was a huge increase, far outpacing overall economic growth. The health sector grew at a 4 percent annual rate, while the overall economy grew at a 2.4 percent rate.

You’d expect some growth in health care spending over this span from the increase in population size and the aging of the population. But that explains less than half of the spending growth. After accounting for those kinds of demographic factors, which we can do very little about, health spending still grew by about $574 billion from 1996 to 2013.

Did the increasing sickness in the American population explain much of the rest of the growth in spending? Nope. Measured by how much we spend, we’ve actually gotten a bit healthier. Change in health status was associated with a decrease in health spending — 2.4 percent — not an increase. A great deal of this decrease can be attributed to factors related to cardiovascular diseases, which were associated with about a 20 percent reduction in spending.

This could be a result of greater use of statins for cholesterol or reduced smoking rates, though the study didn’t point to specific causes. On the other hand, increases in diabetes and low back and neck pain were associated with spending growth, but not enough to offset the decrease from cardiovascular and other diseases.

Did we spend more time in the hospital? No, though we did have more doctor visits and used more prescription drugs. These tend to be less costly than hospital stays, so, on balance, changes in health care use were associated with a minor reduction (2.5 percent) in health care spending.

That leaves what happens during health care visits and hospital stays (care intensity) and the price of those services and procedures.

Did we do more for patients in each health visit or inpatient stay? Did we charge more? The JAMA study found that, together, these accounted for 63 percent of the increase in spending from 1996 to 2013. In other words, most of the explanation for American health spending growth — and why it has pulled away from health spending in other countries — is that more is done for patients during hospital stays and doctor visits, they’re charged more per service or both.

Though the JAMA study could not separate care intensity and price, other research blames prices more. For example, one study found that the spending growth for treating patients between 2003 and 2007 is almost entirely because of a growth in prices, with little contribution from growth in the quantity of treatment services provided. Another study found that U.S. hospital prices are 60 percent higher than those in Europe. Other studies also point to prices as a major factor in American health care spending growth.

There are ways to combat high health care prices. One is an all-payer system, like that seen in Maryland. This regulates prices so that all insurers and public programs pay the same amount. A single-payer system could also regulate prices. If attempted nationally, or even in a state, either of these would be met with resistance from all those who directly benefit from high prices, including physicians, hospitals, pharmaceutical companies — and pretty much every other provider of health care in the United States.

Higher prices aren’t all bad for consumers. They probably lead to some increased innovation, which confers benefits to patients globally. Though it’s reasonable to push back on high health care prices, there may be a limit to how far we should.

Austin Frakt is director of the Partnered Evidence-Based Policy Resource Center at the V.A. Boston Healthcare System; associate professor with Boston University’s School of Public Health; and adjunct associate professor with the Harvard T.H. Chan School of Public Health. He blogs at The Incidental Economist, and you can follow him on Twitter. @afrakt

Aaron E. Carroll is a professor of pediatrics at Indiana University School of Medicine who blogs on health research and policy at The Incidental Economist and makes videos at Healthcare Triage. He is the author of “The Bad Food Bible: How and Why to Eat Sinfully.” @aaronecarroll

A version of this article appears in print on , on Page B1 of the New York edition with the headline: Where U.S. Health Care Stands Out: Price. Order Reprints | Today’s Paper | Subscribe