News: Real Estate, Risk, Economics. May 3-5, 2014

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Table of Contents
(Click to sections below.)

1) The Employment Situation — April 2014 (U.S. Bureau of Labor Statistics) | PropertyPak

2) San Antonio's housing market both ahead and behind statewide trends – San Antonio Business Journal

3) Grand Rapids real estate market attracting hedge funds and investors with deep pockets | MLive com

4) U.S. economy adds 288,000 jobs in April, but size of workforce is shrinking – The Washington Post

5) Yellen's Labor Market Gauges Point to Continued Fed Stimulus – Bloomberg

6) [Highly Recommended] China's crisis is coming — the only question is how big it will be – FT com

7) Recovery Has Created Far More Low-Wage Jobs Than Better-Paid Ones – NYTimes.com

8) [Recommended] Macro and Other Market Musings: The Cure for Neo-Fisherism: History

9) China inflates its GDP statistics

10) [Highly Recommended] Austerity's Legacy: GDP is Far Below Potential, and Not Climbing | Economic Policy Institute

11) How Not to Be Misled by the Jobs Report – NYTimes com

12) Bonds return – YouTube

  1.    The Employment Situation — April 2014 (U.S. Bureau of Labor Statistics) | PropertyPak

    Better employment news for the US:

    Total nonfarm payroll employment rose by 288,000, and the unemployment rate fell by 0.4 percentage point to 6.3 percent in April, the U.S. Bureau of Labor Statistics reported today. Employment gains were widespread, led by job growth in professional and business services, retail trade, food services and drinking places, and ….

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  2.    San Antonio's housing market both ahead and behind statewide trends – San Antonio Business Journal

    When it came to sales activity, San Antonio's housing market actually outpaced the statewide trend.

    On the pricing side, however, the Alamo City lagged a bit behind Texas stats, according to the 2014-Q1 Texas Quarterly Housing Report by the Texas Association of Realtors.

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  3.    Grand Rapids real estate market attracting hedge funds and investors with deep pockets | MLive.com

    GRAND RAPIDS, MI — West Michigan's resurgent real estate market is attracting out-of-town investors, including deep-pocketed hedge funds based in Chicago and Israel, according to a local realtor.

    DeLong is capitalizing on the national attention Grand Rapids attracted in February, when it was ranked as the nation's best market for buying and owning rental property. That conclusion was based on a survey by All Property Management, a Seattle-based online network of property management services.

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  4.    U.S. economy adds 288,000 jobs in April, but size of workforce is shrinking – The Washington Post

    The decline in unemployment was not from people finding jobs, but from a shrinking workforce. The Labor Department said many people who normally enter the job market this time of year — particularly high school and college students seeking summer jobs — simply did not show up.

    Although the share of young people in the workforce has been dropping for decades as many opt to stay in school longer, the pace of the decline has picked up over the past year for reasons that experts say are still unclear.

    Overall, the nation's workforce shrank by more than 800,000 workers last month. That sent the labor force participation rate plummeting 0.4 percentage points to 62.8 percent.

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  5.    Yellen's Labor Market Gauges Point to Continued Fed Stimulus – Bloomberg

    Average hourly earnings declined, while there were more people working part-time because they couldn't find full-time jobs. The participation rate, which measures the proportion of working-age adults holding a job or looking for one, fell to match the lowest level since 1978.

    Those were among the gauges Yellen cited as reasons the economy will need "extraordinary support" from the Fed for "some time to come" when she spoke March 31 in Chicago.

    Mixed signals in the jobs report today suggest "little risk of the Fed tightening policy sooner rather than later," said Brian Jacobsen, who helps oversee $241 billion as chief portfolio strategist at Wells Fargo Advantage Funds in Menomonee Falls, Wisconsin.

    "This is a difficult report for the Fed," said Tim Duy, a former Treasury Department economist who is now a professor at the University of Oregon in Eugene.

    "The headline numbers are very strong and consistent with a story that you are using slack in the economy fairly quickly," Duy said. "The underlying details are fuzzier with the substantial drop in the labor force and substantial underemployment and wage growth still tepid. Wage growth is consistent with a story of substantial slack in the economy."

    Tim Duy is our favorite economist on this subject.

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  6.    [Highly Recommended] China's crisis is coming — the only question is how big it will be – FT.com

    China's economy is in an unbalanced state. It can stay that way for some time — but the longer it does, the worse the eventual outcome will be. The industrial sector is already plagued by falling prices. To avert a wider deflationary spiral, the country needs to wean itself off the false cure of perpetual policy stimulus.

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  7.    Recovery Has Created Far More Low-Wage Jobs Than Better-Paid Ones – NYTimes.com

    WASHINGTON — The deep recession wiped out primarily high-wage and middle-wage jobs. Yet the strongest employment growth during the sluggish recovery has been in low-wage work, at places like strip malls and fast-food restaurants.

    In essence, the poor economy has replaced good jobs with bad ones. That is the conclusion of a new report from the National Employment Law Project, a research and advocacy group, analyzing employment trends four years into the recovery.

    Add your comment.


  8.    [Recommended] Macro and Other Market Musings: The Cure for Neo-Fisherism: History

    … there is a "rebellion" brewing in macroeconomics. Some economists, including Stephen Williamson, John Cochrane, and Stephanie Schmitt-Grohe and Martin, are promoting a very provocative idea that challenges standard monetary economics. They argue that a central bank holding interest rates low for a long period will cause inflation to fall. The conventional view is that such actions should cause inflation to rise. …

    … reasons to be leery of Neo-Fisherism.

    … history is filled with many examples of monetary policy regimes that violate Neo-Fisherism. In fact, it is hard to come up with examples that unambiguously fit the Neo-Fisherite view. For example, some proponents point to Fed policies and the low inflation rate over the past few years as evidence for Neo-Fisherism. However, there are empirical studies that show QE has actually raised inflation in the United States. And arguably, the reason the Fed's programs have not packed more of a punch is their temporary nature. In short, there is little solid evidence for Neo-Fisherism while there is much for the conventional view. So be very leery of Neo-Fisherism.

    Update: Josh Hendrickson speaks to Stephen Williamson and learns that Williamson, Narayana Kocherlakota, and Milton Friedman actually are saying the same thing.

    As we made clear in our last news update, we don't agree with Neo-Fisherism. We said at the time that there are too many uncounted variables. This linked post mentions a number of them in concrete historical examples that jibe with that earlier position of ours.

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  9.    China inflates its GDP statistics

    New World Bank figures, based on Purchasing Power Parity measurements, suggest that China's GDP has caught up with America's. A forthcoming article by Jeremy Wallace in the British Journal of Political Science suggests that neither China's subnational nor national GDP statistics are particularly reliable at moments of political turnover.

    Add your comment.


  10.    [Highly Recommended] Austerity's Legacy: GDP is Far Below Potential, and Not Climbing | Economic Policy Institute

    … the entire gap in GDP growth between the current recovery and historical averages can be explained by the contraction in government spending ….

    … the economy is starting 2014 so far below potential essentially entirely because of the historically unprecedented spending austerity, and that this austerity perversely began when the unemployment rate was extraordinarily high. We should not be surprised where we are today. Sadly, while the outlook for government spending (particularly fiscal) is better in 2014, the rest of the economy sputtered in the first quarter.

    Add your comment.


  11.    How Not to Be Misled by the Jobs Report – NYTimes.com

    … one month of jobs numbers doesn't tell you much of anything about how the economy is actually doing.

    Add your comment.


  12.    Bonds return – YouTube

    Last year many assumed that the 30-year bull market in treasuries was over. A rally in bond prices since then suggests otherwise. John Authers talks to Jim Sullivan, Prudential Financial, about where bond markets are heading, and where value is to be found.

    None of this on Treasurys will surprise our readers, as we had openly predicted that the bond bears were being very premature.

    Add your comment.


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