KeNo's Housing and Economic Portal: Wednesday June 14 2017 Housing and Economic stories

TOP STORIES:

Withdrawing From Paris Accord Helps America's Most Vulnerable - (www.zerohedge.com) Are you concerned about the poor’s economic welfare? If so, you should celebrate President Trump’s announcement that the United States will withdraw itself from the Paris Agreement. The Paris climate accord, which was ratified last year, attempts to “brings all nations into a common cause to undertake ambitious efforts to combat climate change and adapt to its effects.” Supporters of the agreement claim it is necessary to avert the disastrous consequences of climate change. Regrettably, the plan’s supporters are committing the greatest economic fallacy, which Henry Hazlitt, the acclaimed economics writer, warned about in his most prominent work, Economics in One Lesson (1946): The bad economist sees only what immediately strikes the eye; the good economist also looks beyond. The bad economist sees only the direct consequences of the proposed course; the good economist looks also at the longer and indirect consequences.

Haunting Photos of #Carmageddon: Hyundai Gets Crushed, as GM, Ford, Others Struggle - (www.wolfstreet.com) Factory-fresh Hyundai cars stored on vast new gravel lots near the Mexican border. Industry experts had lowered their forecasts for May auto sales, having been overoptimistic every month this year, always figuring that there would be a year-over-year sales increase, when in fact sales fell every month. So for May, they became practically gloomy, but not gloomy enough. J.D. Power and LMC Automotive forecast that new vehicle sales in May would inch up 0.5% year-over-year to 1.54 million cars and light trucks. Edmunds predicted that sales would edge up 0.3% to 1.53 million units. And Kelley Blue Book forecast that sales would be essentially flat year-over-year at 1.525 million: Heavily focused on cars, it has run into the buzz saw of crashing car sales in the US. Its car sales plunged 19.1% in May to 39,567. Even its truck sales fell 7.5% to 20,444. Total sales sagged 15.5%, by far the worst among the major automakers. And its inventory of unsold cars is piling up, but not only on dealer lots! The photos below show Hyundai cars starting to fill up especially created gravel lots just north of the Otay border crossing to Mexico (Tijuana).

Spain's Wounds Run Deep as Economy Retraces Crisis Losses - (www.bloomberg.com) It has taken the Spanish economy a decade to claw back lost output after its worst crisis in modern history, but the wounds are far from healed. While gross domestic product is this quarter on track to finally reach the level registered in 2007, employment is almost 12 percent lower, wages remain subdued and social inequality has risen even as the nation extends a four-year recovery. To support its recovery, while being part of the euro area, Spain had to undergo an internal devaluation through lower salaries coupled with more flexible labor laws. As a result, wages in relation to GDP have fallen to the lowest since 1995. That means middle-income families depending on their paycheck have come under strain, while asset-rich households have held firm.

State Corporate Tax Receipts Just Crashed The Most Since The Recession - (www.zerohedge.com) After flatlining for the past year, US income tax receipts - both at the federal government and on a state and local level - have been disappointing, and have posted a sharp drop since the start of the year, which is "sounding an alarm about the health of the US economy" in BofA's words (in addition to the countless other alarms about the health of the economy, which however are ignored due to the record stock market). As Bank of America highlights something we warned about last September, according to the Rockefeller Institute and CBO, US federal income tax receipts have come in about 3% below expectations this year. Digging deeper, the disappointment was largely in personal current tax receipts, with withheld tax receipts showing little growth over the prior two quarters. The story is a bit different for state and local governments where personal tax receipts were fairly stable, but there was a significant decline in tax receipts for corporate income.

Illinois Bonds Fall as Budget Impasse Pushes Rating Toward Junk – (www.bloomberg.com) Illinois bond prices have dropped as Governor Bruce Rauner and lawmakers remain locked in two-year stalemate over the government’s budget, increasing the chance that it may become the first U.S. state ever cut to junk. Illinois’s 10-year bond yields, which move in the opposite direction as price, have soared to about 5.2 percent, or 3.36 percentage points more than top-rated municipal debt, according to Bloomberg’s indexes. Securities due in 2023, the most actively traded Friday, sold for an average yield of 4.3 percent, a nearly half percentage point jump since May 31, the day before S&P Global Ratings and Moody’s Investors Service downgraded Illinois to the lowest investment grade. The downgrades came after state leaders failed for the third year in a row to approve a spending plan during the regular legislative session, forcing lawmakers to secure a three-fifths majority of the legislature to pass a budget before the start of the next fiscal year on July 1. If they can’t, S&P warned that it will likely cut Illinois’s credit rating again.

OTHER STORIES: