|Nutmeg | Michael Yeraout Photography|
Sunday, March 29, 2020
Friday, March 27, 2020
Thursday, March 26, 2020
Powell says COVID-19 will set the timeline for reopening the U.S. economy
In a rare television interview, Federal Reserve Chairman Jerome Powell told Today show co-anchor Savannah Guthrie the U.S. economy can’t reopen until the coronavirus pandemic is under control.
“The virus is going to set the timeline,” a grim-looking Powell said on the NBC morning show on Thursday.
Powell’s comments contradict President Donald Trump’s calls for “packed churches” on Easter, just over two weeks away. Easter Sunday would be a “beautiful timeline” for reopening the economy, Trump said at a press briefing at the White House on Tuesday.
The Fed chairman had a different outlook.
“The sooner we get the spread of the virus under control, people will regain confidence,” Powell said in the interview. “When they become confident that is the case, they will very willingly open their businesses up, go back to work, the consumer will be spending. So I think the first order of business will be to get the spread of the virus under control and then resume economic activity.”
The head of the central bank rarely gives sit-down interviews. He typically only speaks to reporters during formal press conferences after the Fed’s meetings to answer questions on monetary policy.
During the financial crisis, as the U.S. teetered on the brink of a depression, Ben Bernanke, then chairman of the Fed, never took part in a TV interview.
While Guthrie asked Powell the obligatory question about an economic recession, and Powell affirmed the U.S. likely is experiencing a GDP contraction, that wasn’t the news. There is no major U.S. economic forecaster who isn’t projecting a recession
However, the chairman’s projected it likely would be short, and the rebound sharp. The Fed pledged on Monday it would buy unlimited bonds and take other measures to keep credit flowing.
“This is a unique situation,” said Powell. “This is not a typical downturn” because it’s not due to an underlying weakness in the economy or instability in the banking system, he said.
Republican and Democratic state governors have issued “stay at home” orders for more than half the U.S. population, restricting activity to necessary tasks such as shopping for food. The goal is to slow the spread of the coronavirus to avoid overwhelming hospitals.
States with stay-at-home orders include Ohio, Michigan, Colorado, Connecticut, Massachusetts, Louisiana, Minnesota, New Jersey, New Mexico, New York and Utah.
Other states, such as Texas and Pennsylvania, have issued restrictions in some counties.
Part of the reason people are being urged to stay at home is the breakdown in testing – in the absence of a quick way to know who is carrying COVID-19, people have to act as if anyone might be carrying the disease.
Nations doing widespread testing, like Iceland, have found about half the people who test positive for the disease are showing no symptoms, yet are still contagious.
In the U.S., testing for COVID-19 is still limited, and the disease is still on the upswing. Public health officials in many areas of the country have said in recent days that tests are restricted to health care workers and hospitalized patients because of a shortage of test kits, swabs to administer the tests, and protective equipment to keep safe the workers doing the testing. In most cases it takes days, and sometimes more than a week, to get results.
“We would tend to listen to the experts,” for setting a timetable to resume normal activity, Powell said in the NBC interview, citing Dr. Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases and a member of the White House Coronavirus Task Force
Trump has nixed that type of sentiment, saying at a White House briefing on Tuesday that if public health experts had their way they would “shut down the entire world.” The president pointed out in a tweet on Tuesday that people are killed in car crashes, but the U.S. still allows driving.
“Look at automobile accidents, which are far greater than any numbers we’re talking about,” Trump said in the tweet. “That doesn’t mean we’re going to tell everybody, ‘No more driving of cars.’ So we have to do things to get our country open.”
In fact, while the White House issued guidelines recommending social distancing for 15 days to slow the spread of the coronavirus, Trump didn’t shut down any states, and it would be difficult for him to force unwilling governors to rescind those orders.
Powell said in the Today interview it’s better to rely on the experts.
“We’re not experts in pandemics over here,” he said, referring to the Federal Reserve. “We don’t get to make that decision. I would say that we would tend to listen to the experts.”
Posted by Nancy Yearout at 2:37 PM
Tuesday, March 24, 2020
“Quantitative easing” is aimed at greasing the wheels of the credit markets
The Federal Reserve announced on Monday that it will buy unlimited amounts of Treasuries and agency mortgages, including multifamily, to grease the wheels of the credit markets.
The purchases are attempts to avoid the type of credit crunch seen after the collapse of the financial system in 2008.
Monday’s announcement came eight days after Fed Chairman Jerome Powell said the central bank would restart a quantitative easing, or QE, program created a decade ago. It was slated to be $700 billion in bond purchases, but within the first week, the market specialists who execute those purchases had burned through half of that.
The new move to make unlimited purchases is intended “to support the flow of credit to households and businesses by addressing strains in the markets for Treasury securities and agency mortgage-backed securities,” the Fed said in a statement before stock markets opened on Monday. “The Federal Reserve will continue to purchase Treasury securities and agency mortgage-backed securities in the amounts needed to support smooth market functioning.”
The bond-buying is aimed at providing liquidity and pushing rates lower, which would bolster the economy. The first QE program, announced in December 2008, drove mortgage rates below 5% for the first time ever. This time, it could drive rates below 3%.
Market disruptions have caused some lenders to add a risk premium to mortgage pricing in recent weeks, causing interest rates to rise.
When things settle down, rates could settle down as well, Frank Nothaft, CoreLogic‘s chief economist, told HousingWire last week.
“It may not be tomorrow or next week, but I think longer term as we look to the spring, yes, I think we could see rates moving down to new lows and possibly below 3%,” Nothaft said. “It’s certainly possible.”
Following this morning’s Fed announcement, the NY Fed issued a statement revising its mortgage-bond purchase schedule issued last week.
The bond purchases probably will total at least $125 billion a day, it said. “The desk plans to conduct operations totaling approximately $75 billion of Treasury securities and approximately $50 billion of agency MBS each business day this week, subject to reasonable prices,” the New York Fed said.
“The desk will begin agency CMBS purchases this week,” it said, referring to commercial mortgage-backed securities, without citing a target amount.
In the last week, the Fed has resurrected many of the measures it used during the 2008 financial crisis. It cut interest rates to near zero, re-launched QE bond-buying and opened emergency lending windows to support commercial paper issuers and money market funds.
It has also added new tactics – such as Monday’s announcement that it would buy agency-backed commercial mortgages, which typically are used to build apartment buildings.
The Fed also said it would set up programs to ensure credit flows to corporations and state and local governments. That includes buying municipal debt, which will provide cash to the communities who are on the front lines of the COVID-19 pandemic.
“The Depression was about the Fed moving too slowly,” Neil Dutta, head of economics at Renaissance Macro Research, told Bloomberg News. “We are seeing a lot of things today. But, a slow-moving Fed hasn’t been one of them. That’s encouraging.”
Posted by Nancy Yearout at 11:06 AM
Sunday, March 22, 2020
|Morris | Michael Yearout Photography|
The following animals are available for adoption at the Summit County Animal Shelter. Call the shelter at 970-668-3230 with questions. The most recent list of animals available for adoption can be found via their website.
Posted by Nancy Yearout at 10:09 AM
Friday, March 20, 2020
Existing-home sales performed strongly in February, with three out of the four major regions of the U.S. showing sales increases, the National Association of REALTORS® reported Friday. Home prices also were on the rise last month.
Total existing-home sales—accounting for single-family, townhouse, condo, and co-op transactions—increased 6.5% month over month, reaching a seasonally adjusted annual rate of 5.77 million. Sales were up 7.2% year over year, NAR reports. “February’s sales of over 5 million homes were the strongest since February 2007,” says NAR Chief Economist Lawrence Yun. “I would attribute that to incredibly low mortgage rates and a steady release of sizable pent-up housing demand that was built over recent years.”
Yun acknowledges COVID-19’s impact on the economy in March, but he notes that the impact of the virus on housing likely will be short-term given the strength of sales data prior to the outbreak. “Once the social-distancing and quarantine measures are relaxed, we should see this temporary pause evaporate and potential buyers return [to the market] with the same enthusiasm,” Yun says.
He also notes that housing shortages and low mortgage rates are two factors that could drive the housing market moving forward. Yun says he believes home prices will continue to stay elevated. “Unlike the stock market, home prices are not expected to drop because of the ongoing housing shortage.”
Real estate pros are adapting their businesses in light of restrictions on social gatherings to help slow the spread of the coronavirus. “It is truly inspiring to see so many of our fellow REALTORS® and brokerages adjust on the fly,” says NAR President Vince Malta. “Agents nationwide are keeping consumer interest alive with innovative technologies, holding virtual open houses and computer-generated tours.”
Here’s a closer look at housing indicators for February from NAR’s latest report:
- Home prices: The median existing-home price for all housing types in February was $270,100, up 8% from a year ago. Prices rose in every region of the U.S. in February. This marked the 96th consecutive month of year-over-year price gains.
- Inventory: Housing shortages continue to abound. Total housing inventory at the end of February totaled 1.47 million units, down from 9.8% a year ago. Unsold inventory is at a 3.1-month supply at the current sales pace.
- Days on the market: Forty-seven percent of homes sold in February were on the market for less than a month. Properties stayed on the market for 36 days, down from 44 days a year prior.
- First-time buyers: This cohort comprised 32% of sales in February.
- Investors: Individual investors or second-home buyers accounted for 17% of sales in February, up slightly from 16% a year ago. Investors tend to make up the biggest bulk of all-cash sales, which made up 20% of transactions in February.
Here’s how home sales fared across the country in February:
- Midwest: Existing-home sales rose 0.8% to an annual rate of 1.29 million, up 4% from a year ago. Median home price: $203,700, up 7.9% from a year ago.
- South: Existing-home sales climbed 7.2% to an annual rate of 2.52 million in February, up 8.2% from a year ago. Median home price: $238,000, an 8.2% increase from a year ago.
- Northeast: Existing-home sales dropped 4.1% in February to an annual rate of 700,000, a 2.9% uptick from a year ago. Median home price: $295,400, up 8.2% from a year ago.
- West: Existing-home sales jumped 18.9% to an annual rate of 1.26 million in February, an 11.5% increase from a year ago. Median home price: $410,100, up 8.1% from a year ago.
Posted by Nancy Yearout at 5:45 PM