Monthly Archives: February 2012

Naroff Economic Advisors — January New Home Sales

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NAROFF ECONOMIC ADVISORS, Inc.
Joel L. Naroff
President and Chief Economist

INDICATOR: January New Home Sales

KEY DATA: Sales: -0.9%

IN A NUTSHELL: “Rising builder confidence should start showing up in more contracts for new homes being signed as we go through the first half of the year.”

WHAT IT MEANS: Home construction has slowly been on the rise and that trend is likely to continue. While new home sales eased in January, it came after a large upward revision to the December numbers. When I see the data revised upward, it usually means that activity is accelerating through the month and that trend is not picked up in the first calculations.

The National Association of Homebuilders’ confidence index hit its highest level in four years with the sales index surging. That may not have shown up in the sales data yet but it will. Thus, the small drop in new home purchases in January should not be taken as a signal that the sector is faltering again.

What is of concern was the huge differential in demand across the country. Sales jumped sharply in the Northeast and South but fell by double-digits in the Midwest and West. Weather issues in the Midwest may have played a role there while the overhang of distressed homes is likely keeping down new home purchases in the West. Prices are still quite soft and three-quarters of the homes are going for less than $300,000.

The McMansions of the past two decades have become the MiniMansions of this decade. Builders are keeping the supply of new homes on the market tight and the number of homes for sale is lowest in the nearly fifty years the data have been collected. At current selling rates, the inventory is at its lowest level in six years.

MARKETS AND FED POLICY IMPLICATIONS: While sales eased, all the signs are for the new housing segment to continue to recover this year. However, housing in general is being restrained by mortgage and appraisal issues while the new home portion will continue to be buffeted by the acceleration of the foreclosure process.

There were about 7,000 jobs added in the residential construction industry in January and we could be seeing those types of gains continue for a while. We are starting off the year at a sales pace that is well above what was recorded during 2011 so I expect the market to improve and add to growth all year.

Investors may look at the headline number and be a little troubled. But the pace is actually above what most of us had forecasted given the original December sales pace so people should not be disappointed. As good as the economic data may seem, the issue remains energy and the surge in the price due to uncertainty over Iran.

You have to hand it to the Iranians, as long as they can sell their oil, by saber rattling they have managed to get the price up sharply and their revenues are surging. Of course if the bank restrictions sharply curtail their exports, oil prices could rise even further so until the Iranian crisis eases, look for high and rising gasoline prices.

The jump in gasoline prices curtailed the recovery last spring and it is likely to slow things once again. And of course the Greek situation is still a work in progress. It just seems that the only luck the recovery has is bad luck.

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RE/MAX Connection Realtors is not a licensed financial advisor and is not providing any financial advice. You should consult with a licensed financial advisor prior to making any financial decisions. RE/MAX Connection Realtors only is providing this economic statement from Naroff Economic Advisors, Inc. for informational purposes.

Our company accepts no liability for the content of this email/blog, or for the consequences of any actions taken on the basis of the information provided. Any views or opinions presented in this email/blog are solely those of the author and do not necessarily represent those of the company. Finally, the recipient should check this email and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email.

RE/MAX Connection Realtors, 1000 Lincoln Drive East, Suite Two, Marlton, NJ 08053 www.goconnectionnj.com.

Naroff Economic Advisors — January Existing Home Sales

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NAROFF ECONOMIC ADVISORS, Inc.
Joel L. Naroff
President and Chief Economist

INDICATOR: January Existing Home Sales

KEY DATA: Sales: +4.3%; 1-Family: +3.8%; Condo: 8.3%

IN A NUTSHELL: “Housing sales improved in January but the level is still quite low and a lot of the demand is for distressed homes.”

WHAT IT MEANS: The housing market is not being looked at as a major source of growth but it is a place that we would like to see some improvement. That is happening, though not at a great pace.

Existing home sales did rise solidly in January, but as the National Association of Realtors pointed out, a growing share of the sales were for distressed homes. Nearly a quarter of the homes sold went to investors. That is good as it shows that homes are being recycled into the rental market where demand is growing. But we really need regular buyers to come back at a robust pace if the sector is to get back to normal.

The changing demographics are helping power better condo sales. However, while demand for single-family dwelling was up over the January 2011 rate, it was down fairly sharply in the condo/coop segment. The supply of homes is tight, being roughly six months. Normally that would be a positive sign for the market.

If it is result of non-distressed homeowners being unwilling to sell their homes at the market price and the limited foreclosures, that isn’t an indication of a market that is getting ready to pick up speed. With the recent mortgage company settlement, look for supply of distressed homes to rise. That should keep prices soft. They were down about 2% over the year. Regionally, all parts of the nation showed gains but the biggest increase was in the West.

MARKETS AND FED POLICY IMPLICATIONS: While the housing market is slowly improving, there is little reason to think that the non-distressed segment of the market is poised to take off. Mortgages are still not easy to get, the appraisal process creates impediments to sales and is adding to the large number of failed contracts, equity is tight for many who would like to move and the decline in prices have caused a lot of homeowners to give up trying to sell their homes.

While this was a good report, the level of sales is still disappointing. Until the housing problems are resolved, which could take another three or more years in some regions, don’t expect sales or construction to pick up rapidly. That means construction job gains, which are finally added to payroll increases, should be okay but not a major source of new hiring.

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RE/MAX Connection Realtors is not a licensed financial advisor and is not providing any financial advice. You should consult with a licensed financial advisor prior to making any financial decisions. RE/MAX Connection Realtors only is providing this economic statement from Naroff Economic Advisors, Inc. for informational purposes.

Our company accepts no liability for the content of this email/blog, or for the consequences of any actions taken on the basis of the information provided. Any views or opinions presented in this email/blog are solely those of the author and do not necessarily represent those of the company. Finally, the recipient should check this email and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email.

RE/MAX Connection Realtors, 1000 Lincoln Drive East, Suite Two, Marlton, NJ 08053 www.goconnectionnj.com.

Assemblyman Brown reacts to proposed state budget

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New Jersey Governor Chris Christie has proposed a Fiscal Year 2013 State Budget of $32.1 billion. Here is some information on the budget and reaction to the plan from members of the state Legislature, including Assemblyman Christopher J. Brown.

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    Gov. Chris Christie Proposes State Budget –Millennium News

Yesterday, before a joint session of the State legislature Governor Chris Christie delivered his Fiscal Year 2013 State Budget Address. It includes a modest increase in state aid to schools and the largest ever payment into the public workers’ pension system, but it’s two tax-related proposals that are garnering the most attention and Democrats are bashing both of them.

The $32.1 billion spending plan is more than $2 billion above the current budget. It provides $213 million more for schools over last year. The Christie Administration is projecting revenue growth of 7.3% in the coming year. It is with that revenue that the Administration hopes to fund the first phase of the 10% state income tax cut which is expected to cost $183.3 million in the first year. The legislature would need to approve the tax cut.

Assembly Republican Leader Jon Bramnick says, “Governor Christie outlined a fiscally responsible budget that will advance the New Jersey recovery for taxpayers and businesses. The Governor’s budget increases state educational aid to its highest level in history, makes the required pension payment of $1.1 billion, and cuts income taxes by 10 percent. As a result of Governor Christie’s leadership, we have a budget that funds core priorities and provides tax relief for every New Jerseyan.”

http://nj1015.com/chris-christie-proposes-state-budget-democrats-blast-the-plan/

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    Reaction To Governor’s Budget Address — Millennium News

Assemblyman Christopher J. Brown, R-Burlington
“This budget will cut taxes for every worker in the state and will help property taxpayers with the largest state aid payment to help schools offset the property tax burden in New Jersey history. Sound fiscal policies like these have brought New Jersey back from the brink and this budget will hasten the state’s recovery and ability to add good-paying private-sector jobs.”

Assemblyman Scott Rudder, R-Burlington
“Governor Christie’s first two budgets held the line on taxes and helped create 60,000 private-sector jobs. This budget goes further and will give money back to families and businesses at a time when the states we’re competing with for jobs are considering raising income taxes.This budget will reduce the burden on taxpayers and allow businesses to stay in New Jersey and create the jobs we need.”

Assembly Republican Conference Leader Dave Rible, R-Monmouth and Ocean
“Governor Christie’s budget proposal reflects the priorities that are most important to the people of the state – reducing taxes, creating jobs, and reforming education. The governor’s budget reflects his pledge to fund key programs while maintaining the fiscal discipline he established over the last two years.Because of these fiscal controls, Governor Christie is able to present a pro-growth agenda that will create good-paying jobs and ease the burden on taxpayers. Putting New Jersey’s fiscal house in order is starting to pay dividends. Cutting income taxes by 10 percent, increasing educational aid by over $200 million and targeting $350 million in business tax cuts shows the governor is focused on the core priorities of the state.”

Assembly Republican Budget Officer Declan O’Scanlon, R-Monmouth
“Governor Christie’s first two budgets scored significant victories for taxpayers and fiscal sanity and this is the best New Jersey budget I have ever seen. The 10 percent income-tax cut for every worker in New Jersey combined with increases in state aid to our schools and the continuation of business tax cuts means we haven’t taken our eye off the ball and can deliver a broad and balanced approach to tax relief…

Assembly Republican Anthony M. Bucco, R-Morris and Passaic
“The spending plan proposed by Governor Christie shows that the fiscal priorities established over the last two years are now paying dividends. Residents will benefit from the across-the-board income tax cut as well as from the $213 million increase in educational aid. Businesses will continue to grow and create good-paying jobs because of the $350 million in tax cuts that are contained in the new budget…”

Assemblywoman Donna Simon, R-Hunterdon, Mercer, Middlesex and Somerset
“Today’s announcement underlines Governor Christie’s commitment to provide hardworking taxpayers with the relief they deserve while strengthening the opportunities for students across our state. I am encouraged that fiscal discipline over the last two years has allowed us to increase state funding to our schools by $213 million this year. Education funding now accounts for 36 percent of our total budget. This is the largest amount of state money budgeted for education in New Jersey history…”

http://nj1015.com/reaction-to-governors-budget-address/

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    Analysis: Gov banking on a better economy — Gannett News

In declaring that it is the time to make “better choices,” which includes an income tax cut, Gov. Christie believes now in a much better economy for New Jersey. Experts are not so sure.

Observers and opponents, meanwhile, wonder if Christie’s political agenda is shaping the revenue outlook as the governor turns the corner toward his re-election year. Christie said he believes that state tax revenues are going to increase, in total, by 7.5 percent, which includes a 13.5 percent jump in corporate business taxes and a 6.3 percent hike in income taxes.

Assemblyman Declan O’Scanlon, the Republican budget officer, said he was confident that Christie’s projections are solid, and he noted that in the last two years, Democrats called for more spending and were proven wrong by when revenues came in lower.

“It’s a budget based on the facts on the ground, just as the previous ones were,” said O’Scanlon, of Monmouth County. “The folks who were accurate over the past several years — the administration — ought to get credit for having been right and have the credibility (now). “This governor, I bet you, will not have a year in which he overspends,” O’Scanlon added.

http://www.app.com/apps/pbcs.dll/article?AID=2012302210068

RE/MAX CONNECTION: NUMBER ONE IN NEW JERSEY

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RE/MAX CONNECTION RANKED NUMBER ONE
IN TOTAL UNITS BOUGHT, SOLD IN NEW JERSEY

Contact: Kevin Bayzath
Phone: (856) 988-1800
Email: kbayzath@aol.com

MARLTON (Feb. 15) – RE/MAX Connection Realtors was the number one-ranked RE/MAX real estate company in New Jersey in 2011 and had three of the top four ranked individual agents in the state.

The three RE/MAX Connection offices – in Marlton, Mantua and Turnersville – successfully closed 1,417 transactions, more than any other multi-office operation in the state, as well as closing more than $218 million dollars in real estate transactions. The company also ranked third statewide in overall agent commissions.

RE/MAX Connection agent Mark Petracci, from the Mantua office, was – for the third-straight year — the state’s number one RE/MAX agent. Joining him at the top of the list were Turnersville colleagues David Beach at number three in the state and Joseph Granato at number four.

Among individual office locations, RE/MAX Connection’s Turnersville operation was second in the state in 2011 with the Marlton office being ranked number five.

“We have always said the best agents in the state work at RE/MAX Connection, the best real estate agency in the state,” said Christopher J. Brown, CEO of RE/MAX Connection. “This year’s rankings, once again, prove that point.

“Our goal is to produce the best results every day for our clients as we help them buy or sell property,” Brown continued, “and we are very proud of this recognition of our collective hard work.”

Three other agents from the RE/MAX Connection Turnersville office also received high honors in the 2011 rankings. John Swartz, at number six, and Christopher McKenty, at number seven, finished in the top 10 in the Team Sales category for the year. In addition, Peter Sklikas received the “First Year Performance Award” as the agent who posted the best sales numbers among those joining RE/MAX midyear.

“While other companies in this economy are having a hard time closing deals, RE/MAX Connection agents have adapted and overcome these challenges,” Brown explained. “Among the new techniques our agents are implementing to do this is our Home Price Protection program.”

Home Price Protection is a financial product that provides a payout to homeowners in the event the relative value of their home declines at the time they sell, regardless of what price the home sells for. It is available exclusively in South Jersey by RE/MAX Connection.

Among other individual honors, a total of 36 agents from the three offices achieved three different sales levels of accomplishment. The highest ranking, Platinum Club status, was reached by three agents from the Turnersville office: Joseph Granato, Christopher McKenty and Peter Sklikas.

Among the 16 RE/MAX Connection agents who achieved 100% Club status:
– Eight were from the Marlton office: Mark Cuccuini, Ines De La Cruz, Ron DiPinto, Bryant Lafferty, Brian Menchel, Yvette Veideman, Rochelle Yanchyshyn and Gina Ziegler.
– Four were from the Mantua office: Brent Grigsby, Scott Kompa, Mark Petracci and Dave Sulvetta.
– Four were from the Turnersville office: David Beach, John Swartz, Michael Walton and Frank Wible.

In addition, 17 RE/MAX Connection agents reached Executive Club status:
– Six from Marlton: Joan Baines, Donna Clyde, Joanne Kim, Dawn McCann, Robert Millaway and Elisa Nicolaci.
– Eight from Mantua: Richard Bradford, Donna Breland, Daniel D’Alonzo Jr., Janet Larsen, James Moller, Jennifer Pagliarini, Antoinette Wessel and Brian Ziegenfuss.
– Three from Turnersville: Colleen Dorrego, Danielle McFadden and Heidi Rommel.

“We are especially proud that, despite there being more people and more homes in other portions of the state,” said Kevin Bayzath, Broker of Record for RE/MAX Connection, “our three South Jersey offices, and our outstanding agents, closed more transactions than the competition.”

RE/MAX Connection – Marlton is located at 1000 Lincoln Drive East, Suite Two, Marlton, NJ 08053. Phone: (856) 988-1800. Fax: (856) 988-8020. RE/MAX Connection – Mantua is located at 140 Bridgeton Pike, Mantua, NJ 08051. Phone: (856) 415-1210. Fax: (856) 415-1291. RE/MAX Connection – Turnersville is at 5701 Route 42, Turnersville, NJ 08012. Phone: 856-228-7990. Fax: 856-228-4433.

All three offices are on the web at www.goconnectionnj.com.

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RE/MAX Connection Realtors accepts no liability for the content of this email/blog, or for the consequences of any actions taken on the basis of the information provided, unless that information is subsequently confirmed in writing. RE/MAX Connection Realtors is providing this transmission for informational purposes only. Any views or opinions presented in this email/blog do not necessarily represent those of the company.

The recipient should check this email and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email.

RE/MAX Connection Realtors, 1000 Lincoln Drive East, Suite Two, Marlton, NJ 08053 www.goconnectionnj.com.

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Naroff Economic Advisors — January Employment Report

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NAROFF ECONOMIC ADVISORS, Inc.

Joel L. Naroff
President and Chief Economist

INDICATOR: January Employment Report

KEY DATA: Payrolls: +243,000; Private Sector: +257,000; Unemployment Rate: 8.3% (down 0.2 percentage point)

IN A NUTSHELL: “The economy is starting to turn the corner and the labor market is finally becoming a beneficiary of the improving economic conditions.”

WHAT IT MEANS: For months the data were coming in stronger than expected but it was not clear that businesses were willing to loosen the hiring strings. Well, that may be changing. Private sector firms hired a ton of new workers in January and the gains were across the board.

We were not just talking about service sector positions, though there were a lot of those. But while retailers added only about 10,000 workers, manufacturers hired an additional 50,000 people. Construction, wholesale trade, health care, transportation, professional services, temporary help and restaurants all joined in on the hiring binge.

There was some weakness in finance and information services. The biggest cutbacks, though, were in the public sector, as usual. Local education is still suffering the largest brunt of the budget cutbacks. With hours worked and wages rising, income should be up solidly as well. That will add to spending power, which is badly needed.

But the really good news was on unemployment front. The unemployment rate hit its lowest level in three years. There have been three consecutive declines of 0.2 percentage point, a drop that is much faster than anyone expected but not likely to be sustained.

In January, the improvement came despite a sharp rise in the labor force. That was offset by a huge increase in the number of people who say they are employed, showing it was the economy not statistics that are driving down the rate. (Note: The unemployment rate and payroll numbers come from a different survey.)

MARKETS AND FED POLICY IMPLICATIONS: This is the first time in a long time I can talk effusively about an employment report. It was strong in all components. Payroll gains were across the board. The unemployment rate decline resulted from rising employment not a declining labor force. Wages rose as did hours worked. What was not to like? Nothing!

Since the bottom was hit in February 2010, the private sector has brought back almost 3.7 million workers. Clearly, the jobless recovery is no longer jobless. Still, can we expect the good news to persist? Maybe not at the pace we saw in January, but conditions are such that solid payroll gains and a slow steady decline in the unemployment rate are likely to continue.

Unemployment claims are low enough to support further declines in the rate. Improving conditions in the manufacturing and services sector as reported by the Institute for Supply Management argue that the payroll increases can be sustained.

We still face the restraints of weak housing and limited credit so don’t expect economic or employment growth to surge. But it is likely we will see at least 2.5 million new jobs created this year. The unemployment rate could go below 8% by the fall. Those are not spectacular numbers but just a few months ago not very many people had that in their forecasts (I did, which is why I am saying that.)

Investors should love this report but Mr. Bernanke should be wondering why he insisted on saying that rates will stay low for another three years. If this labor market improvement continues, that is not likely to happen.

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RE/MAX Connection Realtors is not a licensed financial advisor and is not providing any financial advice. You should consult with a licensed financial advisor prior to making any financial decisions. RE/MAX Connection Realtors only is providing this economic statement from Naroff Economic Advisors, Inc. for informational purposes.

Our company accepts no liability for the content of this email/blog, or for the consequences of any actions taken on the basis of the information provided. Any views or opinions presented in this email/blog are solely those of the author and do not necessarily represent those of the company. Finally, the recipient should check this email and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email.

RE/MAX Connection Realtors, 1000 Lincoln Drive East, Suite Two, Marlton, NJ 08053 www.goconnectionnj.com.

Naroff Economic Advisors — Fourth Quarter 2011 Productivity/Unemployment Claims

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NAROFF ECONOMIC ADVISORS, Inc.

Joel L. Naroff
President and Chief Economist

INDICATOR: Fourth Quarter 2011 Productivity/Unemployment Claims

KEY DATA: Nonfarm Productivity: +0.7%; Unit Labor Costs: +1.2%/Claims: 367,000 (down 12,000); 4-Week Average: 375,750 (down 2,000)

IN A NUTSHELL: “As is the usual case, with employment rising, productivity is moderating and that is raising labor costs.”

WHAT IT MEANS: Businesses have worked extraordinarily hard this recovery to restrain all costs but especially labor expenses. They have done so by working employees harder and longer and that has paid off in large increases in productivity and earnings.

Those days are slowly fading as job growth is picking up. The new workers must be trained and at least until demand rises faster, there is somewhat less for each worker to do. Thus, we are now in the normal productivity slowdown phase.

Output by each worker grew in the fourth quarter at less than half the pace posted in the summer period. The biggest decline was in manufacturing, which has been gearing up to deal with rising sales. That sector went from robust increases to decline.

The slowdown in productivity has some major implications for business costs. Worker compensation is rising and even adjusting for inflation, it actually improved at the end of 2012. For all of 2011, productivity rose at the slowest pace since 2008.

If you want to know why consumer demand has not surged, just look at the compensation numbers: Hourly compensation adjusted for inflation fell by 1.2% in 2011. It’s hard to buy more when your spending power is being diminished.

Even with the moderation in productivity, it looks like hiring will remain on the rise. Weekly unemployment claims fell and the trend level has reached a point where the unemployment rate should go down if not monthly, fairly steadily.

MARKETS AND FED POLICY IMPLICATIONS: Usually you have to give up something to get something and that is the case with jobs. As payroll gains accelerate, productivity normally eases, raising business costs but also increasing worker compensation.

That we are seeing that happen should be cheered as the consumer is the centerpiece of this economy. More jobs mean more income and as the unemployment rate declines, wage gains accelerate. That will provide the means to greater consumption and economic growth.

So both the productivity and unemployment claims numbers, when taken in tandem, paint a picture of an economy recovering. The Fed acknowledged that the labor market was beginning to improve but discounted any major drop in the unemployment rate. The accuracy of that forecast will determine the ability of the FOMC to keep rates low until the end of 2014.

I think unemployment rates will fall faster than the monetary authorities do so I expect rates to rise well before that date. Since tomorrow is employment Friday, we only have a few hours to wait until we see how the year started off but not matter what number prints, the decline in the claims numbers does point to an improving labor market that will ultimately show up in more jobs.

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RE/MAX Connection Realtors is not a licensed financial advisor and is not providing any financial advice. You should consult with a licensed financial advisor prior to making any financial decisions. RE/MAX Connection Realtors only is providing this economic statement from Naroff Economic Advisors, Inc. for informational purposes.

Our company accepts no liability for the content of this email/blog, or for the consequences of any actions taken on the basis of the information provided. Any views or opinions presented in this email/blog are solely those of the author and do not necessarily represent those of the company. Finally, the recipient should check this email and any attachments for the presence of viruses. The company accepts no liability for any damage caused by any virus transmitted by this email.

RE/MAX Connection Realtors, 1000 Lincoln Drive East, Suite Two, Marlton, NJ 08053 www.goconnectionnj.com.