Some interesting economic data was released this morning. First of all, housing starts rose unexpectedly, from an annualized rate of 975,000 in May to 1,066,000 in June. However, the increase was led by a 42.5% surge in multi-family dwellings, against a backdrop of a 5.3% decline in single family homes. This is a clear indication of the theory presented in Five Short Blasts at work. As the population continues to grow, people are moving toward smaller, multi-family dwellings. In other words, the per capita consumption of dwelling space is declining, just as Figure 5-2 on page 88 predicts.
Separately, the Labor Department reported that weekly first time jobless claims rose again last week to 366,000. This is an annualized rate of 19 million, or about 13% of the labor force. In other words, one out of ever 8.5 workers will file for unemployment in the coming year if this rate doesn’t rise further. But it’s been on the rise for a year now.
Finally, the Philadelphia Fed Survey of manufacturing shows that manufacturing activity in that region continues to decline, belying claims that manufacturing would rebound with the falling dollar as exports become cheaper and more attractive to foreign buyers. This runs counter to economists’ predictions of a rebound because our trade deficit has nothing (or very little) to do with currency valuations. (See previous posts on this subject.)
Falling per capita consumption of dwelling space, rising unemployment and shrinking manufacturing – none of this is any surprise to someone who understands the theory presented in Five Short Blasts.