Policy Points

18.11.2009 Policy Points Comments Off on Around the Dial – Nov. 18

Around the Dial – Nov. 18

Economic policy reports, blog postings, and media stories of interest:

18.11.2009 Policy Points Comments Off on Housing Market Update

Housing Market Update

Highlights from the latest issue of the Center for Economic and Policy Research’s Housing Market Monitor:

There appeared to be a sharp falloff in the housing market in October, as the November 30th expiration date for the first-time homebuyers tax credit approached. As expected, this credit pulled home purchases forward, leading to a substantial increase in sales in the late summer and early fall.

The underlying glut in housing means that it is only a matter of time before house prices begin to fall again. Delinquencies hit another record in the third quarter of 2009. The 6.25 percent 60-day delinquency rate was 58 percent above the level for the third quarter of 2008. Even with a higher percentage of delinquent homeowners now benefiting from mortgage modifications, the foreclosure rate is still running at near record levels. With unemployment virtually certain to remain high well into next year, there is little prospect for any sizable drop in foreclosures.

As a result, foreclosures will be putting homes on the market at an annual rate of close to a 2 million. This is guaranteed to depress prices in a market with total demand of close to 5 million. In short, house prices will almost certainly resume their decline. The only questions are how soon and how fast.

18.11.2009 Policy Points Comments Off on October Producer Prices

October Producer Prices

The seasonally-adjusted prices received by producers of finished goods rose by 0.3 percent in October, according to data recently released by the U.S. Bureau of Labor Statistics. That same month, the prices received by sellers of intermediate goods rose slightly (+0.3 percent), and the prices received by sellers of crude goods advanced by 5.4 percent.

At each stage of the production process, price increases were attributable to rises in food and energy prices. When energy and food prices are excluded, producer prices for finished goods actually fell by 0.6 percent in October. Absent energy and food costs, producer prices fell for intermediate goods and rose slightly for crude ones.

Over the past year, producer prices have fallen. Unadjusted prices for finished goods have declined by 1.9 percent, and producer prices for intermediate and crude goods have dropped by 7.5 percent and 14.1 percent, respectively.

The new data offer two insights into the state of the American economy. First, the findings suggest that demand for good and services remains weak, though not quite as weak as in recent months.  Second, the report indicates that inflation is not currently a threat to the larger economy.

17.11.2009 Policy Points Comments Off on Lessons in Congestion Pricing

Lessons in Congestion Pricing

Metropolitan areas across the globe are struggling with issues of traffic congestion and are experimenting with various “carrots” and “sticks” intended to persuade commuters to make better use of mass transit systems.

One, albeit controversial, strategy used in some large metros (including New York City) is congestion pricing. Simply put, congestion pricing is a charge levied on motorists who drive an automobile into congested areas at certain peak travel times.

In a recent policy brief, the German Marshall Fund of the United States analyzes the adoption of successful congestion pricing schemes in London and Stockholm and the failure of such a system in Manchester (U.K.) and identifies lessons from Europe that are relevant to American metro areas.

According to the brief, perhaps the most important factor needed to engender public support of transportation policies like congestion pricing is “vision.” Says the author:

The underlying story in both London and Stockholm, however, is the role of “vision” in advancing large-scale change. In using the term “vision,” I am not referring to a single document or plan with
a mission statement and lofty goals. Rather, I have come to
see a vision as something much bigger. It is an underlying
consensus that is shared between leaders and the public. It is widely understood, even if it is not always articulated. And in some way, a vision must be “visual.”
Metropolitan regions like Stockholm and L

The underlying story in both London and Stockholm, however, is the role of “vision” in advancing large-scale change. In using the term “vision,” I am not referring to a single document or plan with a mission statement and lofty goals. Rather, I have come to see a vision as something much bigger. It is an underlying consensus that is shared between leaders and the public. It is widely understood, even if it is not always articulated. And in some way, a vision must be “visual.”

17.11.2009 Policy Points Comments Off on Editor’s Note

Editor’s Note

Between November 5 and November 17, Policy Points will be updated on a reduced schedule. During that time, the blog will be updated once per weekday at approximately 8 AM. Posting will return to a three-per-weekday schedule on November 18.

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