Housing Starts Down

Housing starts fell more than expected last month. Total starts fell a sharp 11.0% from a downwardly revised January level. Starts had been expected to decline to 1.75 mil. units.

Single family starts fell 13.7% m/m from the near-record January level. Severe winter weather likely depressed activity.

Multi-family starts rose a slight 1.9% following the steep 10.8% January drop. These starts have been moving sideways since 1997.

Building permits rose 0.4% following a 5.7% decline in January. Single family permits fell 6.8% after an unchanged January reading.

Chain store sales rose moderately last week for the third consecutive week according to the BTM-UBSW survey.

The 0.4% gain last week lifted the month of March so far 0.5% ahead of the February average.

During the last five years there has been a 63% correlation between the year-to-year percent change in these monthly chain store sales and the change in retail sales of general merchandise, apparel and furniture (GAF, 26% of total retail sales). That correlation is comparable to the 69% correlation between Same Store sales as published by Redbook Instinet Research and GAF sales.

The Federal Reserve left the Federal Funds Target Rate unchanged at 1.25%, the lowest level since 1961. The decision was unanimous and as expected by most economists.

The discount rate remained unchanged with primary credit available at 2.25%.

The press release which accompanied the Fed’s action contained the following statement. "While incoming economic data since the January meeting have been mixed, recent labor market indicators have proven disappointing. However, the hesitancy of the economic expansion appears to owe importantly to oil price premiums and other aspects of geopolitical uncertainties. The Committee believes that as those uncertainties lift, as most analysts expect, the accommodative stance of monetary policy, coupled with ongoing growth in productivity, will provide support to economic activity sufficient to engender an improving economic climate over time."

On the balance of risks, the Fed indicated that "the Committee does not believe it can usefully characterize the current balance of risks with respect to the prospects for its long-run goals of price stability and sustainable economic growth."

Here is the complete text of the Fed's latest press release.

More analysis of the efficacy of US monetary policy from the Federal Reserve Bank of St. Louis click can be found here.