Yet another data point for the housing market and still no sign of the bottom. This weeks print of housing starts data showed more evidence of housing construction activitys veritable freefall. Single-family housing starts slipped to their lowest monthly and quarterly total since 1991 and have contracted by a double-digit pace during the last seven quarters. In fact, the peak-to-trough change in starts is approaching the construction bust of the early 1980s and could even surpass it as housing permits, a forward-looking indicator of building activity, suggest at least another 10 percent decline in starts remains a real possibility before all is said and done.
The monthly retail sales release cast another shadow of doom-and-gloom on the economy. However, it looks like pundits and data-watchers were too caught up in all the negative economic news that they failed to dig into the numbers and see things werent all that bad. Although sales excluding autos and gas stations did contract slightly in December, the decline was due mostly to stores booking their sales in November.
When combining the two months, which effectively represent total holiday spending by consumers, sales increased 0.7 percent on a month-to-month basis and more than 4 percent from the prior year. While plenty of sources of downside risks to consumer spending are out there, namely the housing market, slowing job growth and rising debt service burdens, U.S. consumers remain a resilient bunch and continue to spend time (and money) at the store.