Home Prices and the Labor Market

Leading into tomorrow’s highly anticipated monthly labor report, here’s the last in the series of recently updated charts that lay the S&P Case-Shiller Home Price Index up against other economic data, in this case, the year-over-year change to nonfarm payrolls (see here, here, here, and here for the first four in the set).

Second derivative-wise, things are really looking up for both housing and jobs, but, despite the promising shape of the curves above, both home prices and payrolls are still lower than they were a year ago with an uncertain near-term future, particularly for payrolls.

Current estimates are for a loss of somewhere between 50,000 and 200,000 jobs in tomorrow’s labor report, a number that will have been affected in big way by the record snowfall seen during the month of February on the East Coast.

Actually, there was one more chart in the home prices vs. other data series…

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Like Greece, the state of California postponed bond sales last week. Some $7 billion in Greek debt is being sold today while about $2 billion in California bonds are now rescheduled for an auction sometime next week.

Also like Greece, protests in the Golden State are on the rise, the understandable response to budget cuts by a population whose government has spent far too much for far too long. According to this AP report, the situation is now getting dangerous enough that University of California officials are telling people to stay away from campus.

Officials at the University of California, Santa Cruz are telling employees and others to stay away from the campus because of safety concerns involving protesters.

An advisory was posted Thursday on the school’s Web site urging people to avoid campus as protesters upset about funding cuts block main entrances.

It says a windshield was reported smashed. Police began turning cars away from the campus’ main entrance around 6 a.m.

The protest is part of nationwide demonstrations against cuts to education funding on what’s being called the “March 4th National Day of Action for Public Education.”

It’s hard to believe that, many years ago, higher education in California was virtually free. If memory serves, college costs there have been rising rapidly in recent years but are still less expensive than most of the states in the U.S.

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Greek Bond Sales – So Far, So Good

The word so far is that the Greek bond sale is being well received today with almost $10 billion in offers for less than $7 billion in debt for sale. The premium investors are demanding is roughly three percentage points more than for German bunds, the benchmark for the euro area, where they continue to remain very cool to the whole idea of a bailout.

They are still protesting in Athens, though groups aligned with the Communist Party are probably not going to get much sympathy from the EU after they do things like take over government buildings following Cabinet approval of the new austerity measures.

The Greek government seems to have done their part for now, though that hasn’t stopped hedge funds from betting against the euro.

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A Rising Standard of Living Cures Many Ills

The one thing about the Chinese economy that makes them hard to bet against over the long term is the simple fact that they’re moving up off of such a low base when it comes to developing a robust consumer class, the latest evidence of such coming in this USA Today story about rising auto sales and the nation’s growing fascination with private transportation.

Ahead of the lunar new year holiday that rates as this nation’s biggest party, buyers packed the Huaxiang car market in southwest Beijing. Some wanted to drive home a new car in a physical sign of their success in the soon-ending Year of the Ox; others wanted to trade up before the new Year of the Tiger that began Feb. 14.

Lu Guozhi, 50, a retired railway official, helps a friend shop for a car. They eye a Geely CK sedan, a popular Chinese brand, which comes with an attractive price tag — 39,800 yuan, or about $5,800 U.S. — and qualifies for a government tax break for smaller-engine cars. “I’d prefer a BMW, but I’ll never be able to afford one,” says Lu, who bought his first car a year ago. The Geely’s “exterior looks good, and it doesn’t use much fuel.”

Slightly more than a decade since China’s auto market took off, it’s at an enviable place: It overtook the U.S. last year as the world’s largest auto market. The upheaval ended more than a century of dominance by Detroit’s auto industry.

You can have a lot of booms and busts and both businesses and the government can make lots of costly mistakes, however, when you’ve still got decades of rising standards of living ahead of you, that is one very strong wind at your back.

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Jobless Claims Down, but Still High

The Labor Department reported that initial claims for unemployment insurance fell from an upwardly revised three-month high of 498,000 to 469,000 during the week ended February 27th. As shown below, the four-week moving average fell by 3,500 to 470,750, a level that is still quite high as compared to prior recessions.
IMAGE For example, during the 2001 recession, the four-week moving average exceeded the current level only four times and, during the 1991 recession, this level was surpassed for just two months. Despite the widespread belief (amongst economists, at least) that the recession ended last summer, weekly jobless claims are still about the same as when the 1991 and 2001 recessions were at their worst.

More evidence that the current recession has little in common with the last two comes in the continuing and extended claims data. Continuing claims fell to 4.5 million, a 13-month low, however, extended claims continue to rise, now at 5.9 million.

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