A look at housing construction, the Fed
TEXT OF INTERVIEW
Steve Chiotakis: The Commerce Department this morning says housing construction fell in February, nearly 6 percent. Now this report partly blames some of those snowstorms that iced over much of the northeast and southern United States last month. Juli Niemann is analyst at Smith, Moore & Company. She’s with us live from St. Louis. Hi, Juli.
Juli Niemann: Morning Steve.
Chiotakis: So was February that stormy? I mean how much can weather really affect all these economic indicators? I mean should we really be worried?
Niemann: Oh this is like blaming flu for bad retail sales. It’s a real stretch here. Yes we are at historically low inventories of new homes, but we’re looking at a continually depressed housing market. Builder sentiment is still declining. Buyer traffic — down to where we were last year. Where are we building? Well in the Northeast and the West, but every place is down. You still see creditors not extending loans to new projects, huge number of distressed properties for sales. And buyers don’t want to set in to buy right now simply because job prospects are bad.
Chiotakis: The Federal Reserve, Juli, is meeting today looking at monetary policy and interest rates. How does the Fed factor in the info that we got today — these housing starts — to determine whether or when to ease up on these emergency measures?
Niemann: Well they’re looking at any improving data and we are seeing some improving data in manufacturing and the exports. But the big factor always — still jobs. And hires are still not exceeding the fires here. And inflation. That’s the other key thing. We’re looking at deflation due to asset prices declining, wages declining, and very high productivity. And more of what the Fed’s looking at — credit. Once again freezing up here. The nine biggest TARP babies cut back lending again. So the Fed’s going to… on inflation and be cautious language, but they’re not going to raise rates for the foreseeable future.
Chiotakis: Juli Niemann in St. Louis. Juli, thanks.
Niemann: You bet.
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