In The News Today

Posted at 3:53 PM (CST) by & filed under In The News.

My Dear Extended Family,

I am posting this article from John Williams of for two reasons. First, you need to subscribe to John’s service simply because it is that good and important. The second reason is to put in a proper light the assumption that good economic progress in the US is taking place and that is a constituent of the stronger US dollar, which it is not.


November Housing Starts and Existing Home Sales

December 21, 2011

3.5 Million Home Sales Just Disappeared
Housing Starts Still Bottom Bouncing

PLEASE NOTE: The next regular Commentary is scheduled for Friday, December 23rd, covering the third estimate (second revision) of third-quarter 2011 GDP, November new orders for durable goods and new home sales.  No major economic releases are scheduled and no Commentaries currently are planned in the week between Christmas and New Year’s Day.

Official release status of the 2011 Financial Report of the United States Governmentstill is “to be determined.”  We shall keep you posted.  See Schedule for month ahead.

Best wishes to all for a most joyous holiday season and for a happy, healthy and prosperous New Year!   — John Williams


Opening Comments and Executive Summary.  The National Association of Realtors (NAR) corrected its estimates of existing home sales today (December 21st), and 3.54 million previously reported home sales vanished, in revision, since January 2007.  Put in perspective, the amount of sales wiped out was the total amount of seasonally-adjusted existing home sales that previously had been reported in 2011, through October.  Post-2006, 14.3% of existing home sales were eliminated, with sales in the Northeast taking a 30.9% hit, followed by a 14.2% reduction in the Midwest, 12.3% loss in the South and 5.3% loss in the West.


In revealing recognized reporting problems, the NAR has addressed issues not commonly taken on by trade groups that report industry data, or by the federal government.  Where the nature of some of the problems (overly optimistic underlying assumptions) are common with many government series, including payroll employment and retail sales, the government would do well to overhaul much of its reporting.

Reflecting adjustments for some double-counting, mis-estimates of homes for sale by owner, and some improper inclusion of new home sales, the revisions were structured in such a way as to preserve as much as possible of the previously reported month-to-month and year-to-year patterns.  Sales levels were reduced by 10% to 11% starting in 2007, hitting a peak reduction of 17% in late-2008, and averaging around 14.5% in the most-recent reporting.

As the dust settles around the massive revisions, issues such as an historic break in the series likely will be addressed.  Where NAR suggests that the annual revision for 2007 leaves the data there consistent with the unrevised number for 2006, the above graph—showing the monthly number—is not reflective of a smooth transition from the old series (blue line), to the first point (January 2007) on the red line.  Also the pattern of post-2008 narrowing of the level of downside revision still may reflect some relatively positive (but unrealistic) underlying economic assumptions based on the official end of the 2007 recession.

While the new numbers reflect a weaker housing industry than previously had been reported, the picture in terms of November housing starts remains one of a full-fledged disaster, with activity in the residential construction industry now having completed three years of bottom-bouncing at historically low levels of activity, subsequent to a three-year collapse in industry activity.

The reported 9.3% monthly gain in November housing starts was not statistically meaningful, and it was dominated by an irregular surge in apartments starts.  Net of apartments, monthly single-unit housing starts were up a statistically-insignificant 2.3%.

The broader economic picture will be discussed in the December 23rd Commentary.



Jim Sinclair’s Commentary

Why do you still resist taking delivery of your gold and silver? Why will you not become your own clearing house via the direct registration System?

So few of you have protected yourselves.