Sunday, February 5, 2023

Australia: house prices continue to slide

 The chart shows Corelogic's data (monthly) compared with the quarterly series from the ABS (Australian Bureau of Statistics)

House prices zoomed after the RBA cut interest rates to counter the effects of the Covid Crash.  The government also introduced housing stimulus programs.  But interest rates have been raised, fast, since.  (Lower chart)  And the government stimulus has expired. 

In Oz, mortgage rates are mostly variable, not fixed as they are in the USA.  For most borrowers, the mortgage rate has risen from 2.2% just after the crisis to 6.2%, and monthly payments have risen accordingly.  At the same time, wages are rising by much less than inflation.   Real incomes are falling.  A significant percentage of households are in severe mortgage stress.  As households watch house prices falling, and their personal finances deteriorating, they are unlikely to be optimistic about buying property.  

It's hard to see house prices rising over the next few months.   

Friday, February 3, 2023

The temperature escalator

From ....And then there's Physics

One of the most well-known graphics from Skeptical Science is the escalator. It illustrates how contrarians tend to cherry-pick short time intervals so as to argue that there’s been no warming, while “realists” recognise the reality of long-term warming.

A classic example of the former was the so-called pause, which was based on claims that there had been no warming since the strong El Nino in 1998. Of course, as illustrated by the escalator, there really hadn’t been a pause in global warming.

The Skeptical Science escalator is, however, now slightly dated, with the latest version ending in 2015. I also noticed that Robert Rohde had presented an updated version on Twitter, which he called the staircase of denial.

This motivated me to produce an updated version for Skeptical Science, which I’ve also posted below.

Climate Scientist reacts to Jordan Peterson

A video from ClimateAdam

Jordan Peterson is at it again: (knowingly) sharing misinformation, while asking "Anyone object to this chart?". But what's the truth behind natural climate change, and why is Peterson's representation of global warming so misleading? Climate scientists joined forces to explain and object to the graph that Jordan Peterson presented. I break down the reality and what's really going on in tweets like this.

US job cuts double

 An interesting statistic, a complement to the payrolls data out Friday (US time).  From TradingEconomics.

US-based employers announced 102.943K job cuts in January of 2023, the most since September of 2020, and compared to 43.651K in December. It is also the highest January total since 2009, when 241.749K were announced, as companies are preparing for an economic slowdown, cutting workers and slowing hiring. The technology sector announced the most cuts with 41.829K, 41% of all cuts, and the second highest on record. Retailers announced the second-most cuts with 13K; real estate 2.191K as housing demand and prices fall. Meanwhile, employers announced plans to hire 32.764K workers, primarily in entertainment/leisure. This is down 58% from a year earlier and 37% from December 2022.

Thursday, February 2, 2023

Big 8 PMI ticks up in January

 After falling month on month for a while, the GDP-weighted extreme-adjusted PMI for the big 8 (USA, Euro zone, China, Japan, UK, Brazil, India, Russia) ticked up a little in January.  

Is this the low point?  Well, obviously it could be.  But I think the mild rebound is prolly as much to do with European gas prices falling sharply, because of very mild weather and increased gas supplies.  A physical shortage of gas would cause an immediate economic crunch, whereas monetary tightening only takes effect with a lag.  So the removal of a gas shortage, or the fears of a gas shortage, will cause a rapid rebound.   In fact, the end of the gas crisis has emboldened the ECB to raise rates to fight inflation.  It is expected to raise its discount rate by 0.5% at its next meeting later this week.  And the impact of that will play out over the next year.

In my judgement, this is not the bottom of the business cycle.  But there may be a slowdown in the rate of decline, or a levelling off over the next couple of months before the slide resumes.

We shall see.

US PMI and ISM show further decline

The average of the US ISM and PMI surveys, released yesterday, fell again in January.   As usual, the green line is the one to concentrate on.    This is the third month that the combined index has been below the 50% "recession line".  

In other news, the Fed raised the target Fed Funds rate by 0.25%, and in their announcement of the change said that they expected there would be further increases.  

The building's on fire

 By Cathy Wilcox  [This is the first time I've linked a cartoonist's Mastodon account]

[This is in reference to Australia's plan to cut its own emissions but to expand emissions from the fossil fuels it exports, which will be 5 times as large]