U.S. housing starts dropped to the lowest level in nine months, according to data released today by the U.S. Commerce Department.
Forecasts were already low, considering building has been slowing due to a drop in affordability. But the poor numbers in today’s report didn’t even meet expectations. Permits for new projects dipped as well. While these numbers are weakening in the United States, this is also a global phenomenon. Supply chain issues for materials necessary for construction are a factor, so is a worsening general perception of the world economy. We could soon be seeing cuts in construction jobs as well as jobs in related industries like steel. And there could be other negative downstream effects. If home prices decline due to weaker demand and higher interest rates, that will cut into people’s perceived net worth, which will worsen economic sentiment even more. What’s more, fewer showings of homes, according to a survey of realtors, indicate that this trend won’t be stopping any time soon. This is all a true vicious circle.
Yet, the White House considered this an appropriate moment to declare victory over gas prices. Yes, gas prices are down to around $4.50 for the first time in over a month, but they are still nearly double what they were when Biden took office. Even one analyst on CNN (which is test-driving an editorial voice other than “dumber, more boring MSNBC”) blogged, “It’s like scoring a touchdown and doing a victory dance in the end zone when you’re still losing 35-7.”
Elsewhere in financial news, Netflix lost almost a million subscribers; but this number was apparently better than expectations, so Wall Street was happy. The streaming giant also announced the purchase of an animated movie studio, and Chief Reed Hastings predicted the imminent demise of “linear TV.”
Twitter stock also jumped, as Elon Musk lost his bid to delay his trial with Twitter. It will proceed in October.
A Bank of America survey indicated that investors are deeply fearing a recession, but Main Street consumers are more optimistic than previously thought.
Overall, this was enough good news to drive the markets to a solid day.