August 18, 2018
The textbook story of why the Trump tax cut would be bad for the economy is that it would lead to higher interest rates, which would discourage investment and construction. (It should also lead to a rise in the dollar against foreign currency, which increases the size of the trade deficit.)
Given the textbook story, it would have been reasonable to expect that the weak housing start data reported by the Commerce Department on Thursday would get some attention. While the Wall Street Journal was on the job, both The New York Times and The Washington Post seem to have ignored the numbers.
The basic story is that July starts were up slightly from June, but still 1.4 percent below year-ago levels. The monthly data are erratic, but over the last three months, starts have averaged 1,215,000 at an annual rate. That compares to an annual rate of 1,317,000 in the first three months of the year.
While this drop is not a disastrous falloff, it does mean that folks who were hoping that increased supply would put downward pressure on housing costs are likely to be disappointed. I know it’s summer, but it would have been worth finding someone to take a few minutes to write up the July data.
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