Elliot Eisenberg Economic & Policy Blog

Affordability

Absence In 2024 , the income needed to buy a median priced home of $ 429,734 and spend no more than 30 % of income on housing was $ 116,782 . A buyer with the median income of $ 83,782 , would have to spend 41.8 % of their income on housing . While that is a slight improvement from 42.2 % in 2023 , 2024 ranks as the second least affordable homebuying year on record . Between 2013-2019 , it averaged 29.1 %.

Index Indications In 2022 and 2023 , only 29 % of firms in the S & P 500 index beat the index . This lopsidedness means relatively few companies are doing very well , and a majority are performing below average . From 2000-2022 , the percentage was about 50 %, which is what you would generally expect . Aside from 2020 , the last time the percentage of

winners was so low was in 1998 and 1999 during the dotcom boom . Ugh .

California Catastrophe While the LA fires are likely to go down as the costliest climate disaster in US history , and may top $ 300 billion , 1 % of GDP , the national economic impact is likely to be small . Maybe a 0.2 % drag in GDP in 25Q1 , a loss of 30,000 jobs , and a rise of 0.1 % in inflation . Locally , building products , residential construction labor , rents , and cars , are likely to see noticeable price increases .

Surprising Starts December housing starts were a surprisingly strong 1.499 million units seasonally adjusted and annualized , up 51.3 % M-o-M . But three things make this number suspect . First , two-thirds of the rise came in the South where hurricanes Helene and Milton did extensive damage . Second , multifamily starts soared 61.5 % M-o-M , single-family rose a pedestrian 3.5 % M-o-M . Finally , weather in December averaged 38F , not the usual 32F , a one standard deviation event . Oneoff .

Puck Percentage After peaking mid-last decade at 91.5 %, the percentage of shots saved by goaltenders has steadily declined and last year reached a 19-year low of 90.3 %. Players are taking 10 % fewer shots , most of which are easy to save , and instead are making more lateral cross ice passes , forcing goalies out of position . They ’ re also taking more shots on net while the goalie ’ s vision is obscured .

Bond Bear Bond Bear Looking at a graph of yields on US Treasurys , one is immediately confronted with the fact we are now in the sixth year of the third Treasury Great Bond Bear Market ( GBBM ) since 1790 . The first GBBM was from 1899 to 1920 . The second commenced in 1946 and terminated in 1981 , and the current GBBM began in 2020 and remains ongoing . GBBMs are long lived , let ’ s hope this one isn ’ t .

Inflation Indicators The PCE has , since 2000 , been the Fed ’ s preferred inflation measure . There are several key differences between it and the CPI . The PCE includes things you consume but don ’ t buy . Thus , healthcare is 16 %

of the PCE but 7 % of CPI . Also , PCE basket updates are much timelier , and the PCE eschews imputed prices . Since 2000 , PCE has averaged 0.39 %/ year lower than the CPI . It ’ s by far the better index .

Engaging Employment Net December employment growth blew past expectations with a rise of 256,000 jobs , the largest rise since 3 / 24 . Moreover , the unemployment rate declined to 4.1 % and Oct / Nov revisions were insignificant . This is evidence that the labor market has tightened and may be gaining steam . With the Trump administration about to take the reins and concerns about tariffs and such on top of mind , near term rate cuts are on hold .

Elliot Eisenberg , Ph . D . is an internationally acclaimed economist and public speaker specializing in making economics fun , relevant and educational . Dr . Eisenberg earned a B . A . in economics with first class honors from McGill University in Montreal , as well as a Master and Ph . D . in public administration from Syracuse University . Eisenberg is the Chief Economist for GraphsandLaughs , LLC , a Miami-based economic consultancy that serves a variety of clients across the United States . He writes a syndicated column and authors a daily 70-word commentary on the economy that is available at www . econ70 . com .

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