Strength in housing and cars, oh my! The two consumer goods which turn down before recessions, and up before recoveries, are houses and motor vehicles, in that order.Since January housing permits and starts came out yesterday, let’s take a look at both. First, while housing starts retreated slightly from their December levels, the more leading and less volatile permits, and the even less volatile single family permits, both made new 14 year highs. The below graph normalizes all three series to 100 as of yesterday’s report, better to show the long term context: Starts were not so high as in prior booms, but permits were higher than at virtually all past periods except for the early 1970s and the early 2000s bubble. That’s really strong,
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NewDealdemocrat considers the following as important: car sales, housing and domestic demand, US EConomics, US/Global Economics
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Strength in housing and cars, oh my!
The two consumer goods which turn down before recessions, and up before recoveries, are houses and motor vehicles, in that order.
Since January housing permits and starts came out yesterday, let’s take a look at both.
First, while housing starts retreated slightly from their December levels, the more leading and less volatile permits, and the even less volatile single family permits, both made new 14 year highs. The below graph normalizes all three series to 100 as of yesterday’s report, better to show the long term context:
Starts were not so high as in prior booms, but permits were higher than at virtually all past periods except for the early 1970s and the early 2000s bubble.
That’s really strong, and as I’ve said many times over the past half a year, bodes really well for the broader economy in 2021 once the pandemic is brought under control.
Second, it’s a similar story when we turn to motor vehicles. The below graphs normalize both cars and light trucks (blue) and heavy trucks (red) to 100 as of their most recent January data:
Both are closing in on, but not yet at, their prior peaks.
The below is the same information zoomed in on the past 18 months:
Heavy trucks are back about 3/4’s from their worst pandemic levels, and cars and light trucks about 90%.
In short, both of the most important household purchases have returned to close to or have even exceeded their pre-pandemic levels. I am confident this strength is going to expand into the broader economy over the next 3 to 6 months unless there is an unexpected setback in the abatement of the pandemic.