Laugh From your Heart with Canada to World Trade 2013
laugh , From your Heart , with us 2013
Thursday, December 20, 2012
Wednesday, December 19, 2012
Is a decline in midlevel jobs 2013 hurting the U.S. recovery?
Is a decline in midlevel jobs 2013 hurting the U.S. recovery?
Some economists and U.S. Federal Reserve policymakers worry that a declining market for middle-skilled jobs exacerbated unemployment during the Great Recession and is now hurting the recovery.
But a new paper on "job polarization" from the Boston Federal Reserve Bank punches some holes in that theory. Among other things, it finds that the disappearance of midlevel jobs is not behind the troubling mismatch between the skills workers have and the skills employers seek.
The paper, published last week as the Fed gathered to decide its next move, may undermine hard-line policymakers who warn that high unemployment could be the new normal and that the central bank has gone too far in its efforts to get Americans back to work.
Job polarization has been spreading for decades.
Employment opportunities have eroded for factory workers, kindergarten teachers and others in the "middle" of the skills spectrum. At the same time, opportunities have become more plentiful for higher-skilled professionals, such as engineers, and lower-skilled workers, like groundskeepers.
The paper highlights this troubling trend, which could get more attention now that the central bank has said it plans to keep interest rates near zero at least until the unemployment rate drops down to 6.5 percent, from 7.7 percent last month.
Some economists have argued that polarization went into overdrive in the 2007-2009 recession and left a lasting scar on the labor market.
If they are right, the jobless rate may not return to pre-recession levels around 5 percent, and the Fed's unprecedented steps to boost employment might be wrong and risky.
'STRUCTURAL' VS. 'CYCLICAL' UNEMPLOYMENT
The Fed's decision last week to tie interest rates to achieving a specific jobless level underscored how closely monetary policy will hinge on achieving progress in the labor market.
With policymakers trying to determine why employment growth is so sluggish, the findings of the Boston Fed paper might turn some heads.
Examining the job-finding prospects for those in the troubled "middle-skill" category, the paper's authors concluded that polarization had little to do with the slow U.S. recovery and was not responsible for a skills mismatch seen in the so-called Beveridge curve, which shows unemployment has remained high even while job openings are plentiful.
Further, the paper finds, the salesmen and construction workers and others who lose their middle-skill jobs in recessions are no more likely to move to high- or low-skilled jobs, or to leave the labor force, than they are in boom times.
"If unemployment today is structural - so that some workers are doing well while others are not - the classification of the winners and losers doesn't line up neatly with the classification stressed in the polarization literature," said Christopher Foote, a Boston Fed senior economist and policy adviser who wrote the paper with bank research associate Richard Ryan.
Essentially, the findings are a blow to those who argue that the labor market has undergone longer-term "structural" changes due to the deep 2007-2009 recession and who attribute at least part of that to polarization.
And they could provide support to Fed Chairman Ben Bernanke and others who argue that an accommodative monetary policy can help repair the shorter-term "cyclical" damage to the market.
LOOKING FOR ANSWERS
Automation and the transfer of U.S. jobs to other countries, particularly in manufacturing, partly explain the hollowing out of middle-skilled employment over the last 30 years and the growing divide between the nation's wealthy and poor.
While automation can replace routine jobs like car assembly, demand has grown for those adept at new technologies. On the low end of the skills spectrum, jobs in areas like child care and food preparation cannot be shipped overseas.
Among central bank policymakers, the effect of polarization on unemployment is a hot topic.
A Fed policy meeting in September included a discussion on the "ongoing process of polarization in the labor market," which suggested "a lower level of potential output and thus reduced scope for combating unemployment with additional monetary policy stimulus," according to minutes of the meeting.
Later that month, Philadelphia Fed President Charles Plosser said monetary policies could not cure the "frictions" and "structural adjustments" that are holding back the labor market.
In a notable paper published earlier this year, economists Nir Jaimovich of Duke University and Henry Siu of the University of British Columbia concluded that polarization was behind the "jobless recoveries" in the last three U.S. recessions.
But the Boston Fed paper disputes that finding and argues that polarization did not accelerate during recent recessions. Some 75 percent of middle-skilled workers who lost their jobs ended up back in that category, more than workers who lost high- or low-skilled jobs, the paper said.
"We don't find micro-level evidence for the type of link between jobless recoveries and polarization" that Jaimovich and Siu offer, Foote said.
But a new paper on "job polarization" from the Boston Federal Reserve Bank punches some holes in that theory. Among other things, it finds that the disappearance of midlevel jobs is not behind the troubling mismatch between the skills workers have and the skills employers seek.
The paper, published last week as the Fed gathered to decide its next move, may undermine hard-line policymakers who warn that high unemployment could be the new normal and that the central bank has gone too far in its efforts to get Americans back to work.
Job polarization has been spreading for decades.
Employment opportunities have eroded for factory workers, kindergarten teachers and others in the "middle" of the skills spectrum. At the same time, opportunities have become more plentiful for higher-skilled professionals, such as engineers, and lower-skilled workers, like groundskeepers.
The paper highlights this troubling trend, which could get more attention now that the central bank has said it plans to keep interest rates near zero at least until the unemployment rate drops down to 6.5 percent, from 7.7 percent last month.
Some economists have argued that polarization went into overdrive in the 2007-2009 recession and left a lasting scar on the labor market.
If they are right, the jobless rate may not return to pre-recession levels around 5 percent, and the Fed's unprecedented steps to boost employment might be wrong and risky.
'STRUCTURAL' VS. 'CYCLICAL' UNEMPLOYMENT
The Fed's decision last week to tie interest rates to achieving a specific jobless level underscored how closely monetary policy will hinge on achieving progress in the labor market.
With policymakers trying to determine why employment growth is so sluggish, the findings of the Boston Fed paper might turn some heads.
Examining the job-finding prospects for those in the troubled "middle-skill" category, the paper's authors concluded that polarization had little to do with the slow U.S. recovery and was not responsible for a skills mismatch seen in the so-called Beveridge curve, which shows unemployment has remained high even while job openings are plentiful.
Further, the paper finds, the salesmen and construction workers and others who lose their middle-skill jobs in recessions are no more likely to move to high- or low-skilled jobs, or to leave the labor force, than they are in boom times.
"If unemployment today is structural - so that some workers are doing well while others are not - the classification of the winners and losers doesn't line up neatly with the classification stressed in the polarization literature," said Christopher Foote, a Boston Fed senior economist and policy adviser who wrote the paper with bank research associate Richard Ryan.
Essentially, the findings are a blow to those who argue that the labor market has undergone longer-term "structural" changes due to the deep 2007-2009 recession and who attribute at least part of that to polarization.
And they could provide support to Fed Chairman Ben Bernanke and others who argue that an accommodative monetary policy can help repair the shorter-term "cyclical" damage to the market.
LOOKING FOR ANSWERS
Automation and the transfer of U.S. jobs to other countries, particularly in manufacturing, partly explain the hollowing out of middle-skilled employment over the last 30 years and the growing divide between the nation's wealthy and poor.
While automation can replace routine jobs like car assembly, demand has grown for those adept at new technologies. On the low end of the skills spectrum, jobs in areas like child care and food preparation cannot be shipped overseas.
Among central bank policymakers, the effect of polarization on unemployment is a hot topic.
A Fed policy meeting in September included a discussion on the "ongoing process of polarization in the labor market," which suggested "a lower level of potential output and thus reduced scope for combating unemployment with additional monetary policy stimulus," according to minutes of the meeting.
Later that month, Philadelphia Fed President Charles Plosser said monetary policies could not cure the "frictions" and "structural adjustments" that are holding back the labor market.
In a notable paper published earlier this year, economists Nir Jaimovich of Duke University and Henry Siu of the University of British Columbia concluded that polarization was behind the "jobless recoveries" in the last three U.S. recessions.
But the Boston Fed paper disputes that finding and argues that polarization did not accelerate during recent recessions. Some 75 percent of middle-skilled workers who lost their jobs ended up back in that category, more than workers who lost high- or low-skilled jobs, the paper said.
"We don't find micro-level evidence for the type of link between jobless recoveries and polarization" that Jaimovich and Siu offer, Foote said.
Reporting By Canada For trade For all world
Obama rejects Boehner 2013backup plan on "fiscal cliff" 2013
Obama rejects Boehner 2013backup plan on "fiscal cliff" 2013
news about economy
Reporting By canada4tradeThe White House
on Tuesday rejected House of Representatives Speaker John Boehner's
"fiscal cliff" backup proposal, saying it fails to meet President Barack
Obama's call for a balanced approach and does not put enough of a tax
burden on the wealthiest Americans.
The White House weighed in after an aide to Boehner, the top Republican in Congress, said the speaker would begin work on "Plan B" legislation, which would simply extend lower tax rates for incomes below $1 million a year, while negotiations proceed with the White House on a broader tax and spending deal.
"He (Obama) is not willing to accept a deal that doesn't ask enough of the very wealthiest in taxes and instead shifts the burden to the middle class and seniors," Obama spokesman Jay Carney said in a statement. "The president is hopeful that both sides can work out remaining differences and reach a solution so we don't miss the opportunity in front of us today."
The White House weighed in after an aide to Boehner, the top Republican in Congress, said the speaker would begin work on "Plan B" legislation, which would simply extend lower tax rates for incomes below $1 million a year, while negotiations proceed with the White House on a broader tax and spending deal.
"He (Obama) is not willing to accept a deal that doesn't ask enough of the very wealthiest in taxes and instead shifts the burden to the middle class and seniors," Obama spokesman Jay Carney said in a statement. "The president is hopeful that both sides can work out remaining differences and reach a solution so we don't miss the opportunity in front of us today."
Fed's Fisher says 2013 quantitative easing insufficient to boost U.S. jobs 2013 canada trade
Fed's Fisher says 2013 quantitative easing insufficient to boost U.S. jobs 2013 canada trade
"Quantitative easing is a necessary but insufficient tool to spark job creation," Dallas Fed President Richard Fisher said at the Gainesville Area Chamber of Commerce. "Employers will not deploy the cheap and abundant capital on hand toward job creation while there is so much uncertainty surrounding final demand for the goods and services they sell."
Businesses are also holding back because of uncertainty over the so-called fiscal cliff, he said, because they do not know what their taxes will be or how government spending patterns will affect them.
Fisher compared U.S. businesses, with access to liquidity provided by an accommodative Fed, to a 2,200-pound bull named Too Big to Fail that lives on Fisher's East Texas farm and whose job is to breed the farm's Longhorn cows.
"Too Big has plenty of liquidity at his disposal; he's fully equipped to do what we pay him to do," Fisher said. "But if we put him on the opposite side of the fence from those pretty cows, he's unable to perform."
"All the monetary accommodation we've made possible... will not be used unless we get clarity and a reduction of uncertainty through a resolution of the fiscal cliff," Fisher said.
The Fed last Wednesday said it would keep interest rates near zero until unemployment -- now at 7.7 percent -- fell at least to 6.5 percent, as long as inflation does not rise above 2.5 percent. It was the first time the Fed had picked a specific marker for unemployment to guide policy.
It also said it would buy $45 billion in longer-term Treasuries each month, on top of its monthly purchases of $40 billion in mortgage-backed securities, until it sees a substantial improvement in the outlook for the U.S. labor market.
The Fed will fund the new Treasury purchases with an expansion of its $2.9 trillion balance sheet. Under the expiring "Operation Twist" program, the Fed bought an identical amount, but paid for them with proceeds from sales and redemptions of short-term debt.
The program is expected to swell the U.S. central bank's balance sheet to more than $3 trillion.
The sheer size of the Fed's holdings is "compounding the difficulty of exit" from the Fed's current super-easy monetary policy, Fisher told reporters after a speech here. "It might even impair our balance sheet."
Under current low Treasury yields, the Fed books gains on its bond holdings, and remits profits to the Treasury. If yields rise, the Fed may no longer be able to remit profits to the Treasury, he said.
"I worry that if we were to get into that situation -- please stress the word 'if' -- we might have more efforts to politically interfere with our independence," he said. "I'm not willing to tolerate that risk."
(Reporting by Ann Saphir; Additional reporting by Pedro Nicolaci da Costa in Washington; Editing by Chizu Nomiyama)
Businesses are also holding back because of uncertainty over the so-called fiscal cliff, he said, because they do not know what their taxes will be or how government spending patterns will affect them.
Fisher compared U.S. businesses, with access to liquidity provided by an accommodative Fed, to a 2,200-pound bull named Too Big to Fail that lives on Fisher's East Texas farm and whose job is to breed the farm's Longhorn cows.
"Too Big has plenty of liquidity at his disposal; he's fully equipped to do what we pay him to do," Fisher said. "But if we put him on the opposite side of the fence from those pretty cows, he's unable to perform."
"All the monetary accommodation we've made possible... will not be used unless we get clarity and a reduction of uncertainty through a resolution of the fiscal cliff," Fisher said.
The Fed last Wednesday said it would keep interest rates near zero until unemployment -- now at 7.7 percent -- fell at least to 6.5 percent, as long as inflation does not rise above 2.5 percent. It was the first time the Fed had picked a specific marker for unemployment to guide policy.
It also said it would buy $45 billion in longer-term Treasuries each month, on top of its monthly purchases of $40 billion in mortgage-backed securities, until it sees a substantial improvement in the outlook for the U.S. labor market.
The Fed will fund the new Treasury purchases with an expansion of its $2.9 trillion balance sheet. Under the expiring "Operation Twist" program, the Fed bought an identical amount, but paid for them with proceeds from sales and redemptions of short-term debt.
The program is expected to swell the U.S. central bank's balance sheet to more than $3 trillion.
The sheer size of the Fed's holdings is "compounding the difficulty of exit" from the Fed's current super-easy monetary policy, Fisher told reporters after a speech here. "It might even impair our balance sheet."
Under current low Treasury yields, the Fed books gains on its bond holdings, and remits profits to the Treasury. If yields rise, the Fed may no longer be able to remit profits to the Treasury, he said.
"I worry that if we were to get into that situation -- please stress the word 'if' -- we might have more efforts to politically interfere with our independence," he said. "I'm not willing to tolerate that risk."
(Reporting by Ann Saphir; Additional reporting by Pedro Nicolaci da Costa in Washington; Editing by Chizu Nomiyama)
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your welcome
Fed rejects idea 2013 of consensus forecasts, "maybe forever": canada4trade
Fed rejects idea 2013 of consensus forecasts, "maybe forever": canada4trade
The U.S. Federal Reserve, which last week for the first time adopted specific economic guideposts to help shape expectations for how long rates will stay low, has for now dropped the idea of coming up with a collective forecast for the economy.
Fed policymakers will instead continue to make their individual best guesses on what's ahead for inflation, unemployment, and GDP growth, which the Fed publishes quarterly in a so-called summary of economic projections, or SEP.
"It's an exercise that we have played with as a committee," Dallas Federal Reserve Bank President Richard Fisher told reporters after a speech here, when asked about the Fed's efforts to develop a consensus forecast. "And we have for the time being -- and maybe forever, maybe -- decided to keep with this SEP exercise that we have."
The Fed spent time at least two meetings looking at the mechanics of developing a joint view on the economic outlook.
But Fed officials seem to have concluded that coming to a consensus on overall policy is hard enough, let alone getting all 19 policymakers to agree to every nut and bolt on the thinking that goes into it. Each forecast in the SEP has its own underlying assumptions on the appropriate path of policy.
The Fed last Wednesday said it would keep interest rates near zero until unemployment - now at 7.7 percent - falls at least to 6.5 percent, as long as inflation does not rise above 2.5 percent. The vote was 11 to 1, with only Richmond Fed President Jeffrey Lacker dissenting; several non-voters, including Fisher, also objected.
At least one top Fed official, Minneapolis Fed President Narayana Kocherlakota, has said that having a collective Fed view on inflation and other important economic metrics would be an essential part of adopting thresholds.
If there is no known collective view on the economy from Fed policymakers, he worried before last week's meeting, investors will be unable to judge whether the Fed believes its thresholds have been breached, and therefore will find it difficult to anticipate when rates will rise.
Fisher, however, suggested that the market can rely on Fed Chairman Ben Bernanke to show the way, even without consensus forecasts. Bernanke gives quarterly press conferences that give him the chance to explain and expand on policy decisions.
"Ben's press conferences are the most important,
Fed policymakers will instead continue to make their individual best guesses on what's ahead for inflation, unemployment, and GDP growth, which the Fed publishes quarterly in a so-called summary of economic projections, or SEP.
"It's an exercise that we have played with as a committee," Dallas Federal Reserve Bank President Richard Fisher told reporters after a speech here, when asked about the Fed's efforts to develop a consensus forecast. "And we have for the time being -- and maybe forever, maybe -- decided to keep with this SEP exercise that we have."
The Fed spent time at least two meetings looking at the mechanics of developing a joint view on the economic outlook.
But Fed officials seem to have concluded that coming to a consensus on overall policy is hard enough, let alone getting all 19 policymakers to agree to every nut and bolt on the thinking that goes into it. Each forecast in the SEP has its own underlying assumptions on the appropriate path of policy.
The Fed last Wednesday said it would keep interest rates near zero until unemployment - now at 7.7 percent - falls at least to 6.5 percent, as long as inflation does not rise above 2.5 percent. The vote was 11 to 1, with only Richmond Fed President Jeffrey Lacker dissenting; several non-voters, including Fisher, also objected.
At least one top Fed official, Minneapolis Fed President Narayana Kocherlakota, has said that having a collective Fed view on inflation and other important economic metrics would be an essential part of adopting thresholds.
If there is no known collective view on the economy from Fed policymakers, he worried before last week's meeting, investors will be unable to judge whether the Fed believes its thresholds have been breached, and therefore will find it difficult to anticipate when rates will rise.
Fisher, however, suggested that the market can rely on Fed Chairman Ben Bernanke to show the way, even without consensus forecasts. Bernanke gives quarterly press conferences that give him the chance to explain and expand on policy decisions.
"Ben's press conferences are the most important,
House Republicans 2013 to vote on "fiscal cliff" bill Thursday: Cantor
House Republicans 2013 to vote on "fiscal cliff" bill Thursday: Cantor 2013
U.S. House of Representatives Majority Leader Eric Cantor said he expects a vote on a Republican offer to avert the "fiscal cliff" on Thursday, and he expects to have enough votes to pass the measure.
Cantor spoke on Tuesday, a day after top Republicans rejected the latest White House offer to avert some $600 billion in tax hikes and spending cuts looming at year's end, known as the fiscal cliff.
Instead, Republicans plan a vote on a bill to raise taxes on income above $1 million while extending low rates for other taxpayers.
Cantor spoke on Tuesday, a day after top Republicans rejected the latest White House offer to avert some $600 billion in tax hikes and spending cuts looming at year's end, known as the fiscal cliff.
Instead, Republicans plan a vote on a bill to raise taxes on income above $1 million while extending low rates for other taxpayers.
Fitch warns fiscal 2013cliff could cost U.S. its AAA rating canada trade
Fitch warns fiscal 2013cliff could cost U.S. its AAA rating canada trade
Ratings firm Fitch said on Wednesday it is more likely to strip the United States of its triple-A status if a political deal is not reached to halt $600 billion of spending cuts and tax hikes set for early next year.
"Failure to avoid the fiscal cliff ... would exacerbate rather than diminish the uncertainty over fiscal policy, and tip the U.S. into an avoidable and unnecessary recession," Fitch said in its 2013 global outlook, published on Wednesday.
"That could erode medium-term growth potential and financial stability. In such a scenario, there would be an increased likelihood that the U.S. would lose its AAA status."
Fitch currently assigns the United States its highest rating but with a negative outlook. Peer Standard & Poor's has already downgraded the world's biggest economy, lowering the United States to AA+ in August 2011 - a move which appears to have done little to dull the attraction of U.S. bonds for investors.
Fitch added that an agreement on a multi-year deficit reduction plan to stabilize U.S. debt and public finances was likely to see the country keep its triple-A rating.
However, it went on to say that: "failure to put in place a credible fiscal consolidation strategy during 2013 would be likely to result in the U.S. losing its AAA status."
(Reporting by Canada4trade )
"Failure to avoid the fiscal cliff ... would exacerbate rather than diminish the uncertainty over fiscal policy, and tip the U.S. into an avoidable and unnecessary recession," Fitch said in its 2013 global outlook, published on Wednesday.
"That could erode medium-term growth potential and financial stability. In such a scenario, there would be an increased likelihood that the U.S. would lose its AAA status."
Fitch currently assigns the United States its highest rating but with a negative outlook. Peer Standard & Poor's has already downgraded the world's biggest economy, lowering the United States to AA+ in August 2011 - a move which appears to have done little to dull the attraction of U.S. bonds for investors.
Fitch added that an agreement on a multi-year deficit reduction plan to stabilize U.S. debt and public finances was likely to see the country keep its triple-A rating.
However, it went on to say that: "failure to put in place a credible fiscal consolidation strategy during 2013 would be likely to result in the U.S. losing its AAA status."
(Reporting by Canada4trade )
US money market 2013 assets down in latest week: canada4trade
US money market 2013 assets down in latest week: canada4trade
U.S. money market fund assets fell by $9.72 billion to $2.619 trillion in the week ended December 18, the Money Fund Report said on Wednesday.
Taxable money market fund assets fell by $12.44 billion to $2.341 trillion, while tax-free assets rose by $2.72 billion to $278.44 billion, according to the report, published by iMoneyNet.
Yields on taxable money market funds were unchanged from the previous week at 0.02 percent, according to the report.
(Reporting by Angela Moon; Editing by Dan Grebler
U.S. home building permits 2013 permits approach four News canada trade
U.S. home building permits 2013 permits approach four News canada trade
U.S. homebuilding permits touched their highest level in nearly 4-1/2 years in November, pointing to strength in the housing market, even though groundbreaking activity dropped.
The Commerce Department said on Wednesday building permits increased 3.6 percent to a seasonally adjusted annual rate of 899,000 units, the highest since July 2008. That was well above economists' expectations for an 875,000-unit pace.
In contrast, construction starts fell 3.0 percent to an 861,000-unit pace, but that followed three straight months of solid gains and a three-month moving average showed a firming trend.
"The trend is definitely up. Housing is going to make a small contribution to economic growth in 2012 and I would expect that home building will continue to improve through 2013," said Gus Faucher, senior economist at PNC Financial Services in Pittsburgh.
U.S. financial markets were little moved by the data as attention remained fixed on budget talks in Washington. Stocks were little changed, while prices for U.S. Treasury debt were trading higher. The dollar was broadly weak.
The housing market, one of the few bright spots in the economy, has regained some footing after a historic collapse that ignited the worst recession since the Great Depression.
The recovery is broad-based, with sales, home building and prices all showing gains. A report on Tuesday showed builders' confidence in the market for new single-family homes reached its highest level this month since April 2006.
While last month's decline in groundbreaking prompted some economists to trim already meager growth forecasts for the fourth quarter, homebuilding is expected to add to economic growth this year for the first time since 2005.
In the 12 months through November, housing starts were up 21.6 percent, while permits had gained 26.8 percent.
"More and more, the recovery is widespread. It is nice to see it happen," said Barry Rutenberg, a home builder from Gainesville, Florida, and chairman of the National Association of Home Builders.
SHIFT IN PSYCHOLOGY
Mortgage rates remain near record lows, helped by a program launched by the Federal Reserve in September to purchase mortgage-backed securities.
A separate report from the Mortgage Bankers Association showed demand for home loans fell last week as mortgage rates ticked higher. Applications for loans to buy a home had risen in each of the prior five weeks.
Though residential construction only accounts for about 2.5 percent of gross domestic product, economists estimate that for every single-family home built at least three full-time jobs are created.
Last month, permits to build single-family homes dipped 0.2 percent to a 565,000-unit pace. Permits for multi-family homes increased 10.6 percent to a 334,000-unit rate, reflecting buoyant demand for rental apartments.
"Longer term, we may have seen a shift in psychology, which is putting an extreme pressure on builders to provide multi-family homes. Young families are no longer clamoring to buy," said Lindsey Piegza, economist at FTN Financial in New York.
The step down in residential construction last month reflected a 5.2 percent drop in the Northeast, which was slammed by Superstorm Sandy in late October. Starts also tumbled in the West, where they were down 19.2 percent.
Last month, groundbreaking for single-family homes, the largest segment of the market, fell 4.1 percent to a 565,000-unit pace. Starts for multi-family homes slipped 1.0 percent to a 296,00-unit rate.
Economists said the pace of home construction was not keeping up with the bounce in household formation from recession lows, creating potential for upward momentum.
"We haven't been putting up enough housing to keep up with the expanding population. Given that, I would expect to see further improvement in home building in 2013," said PNC Financial's Faucher.
(Additional reporting by Ellen Freilich and Richard Leong in New York; Editing by Andrea Ricci and Tim Ahmann) By Canada For Trade
In contrast, construction starts fell 3.0 percent to an 861,000-unit pace, but that followed three straight months of solid gains and a three-month moving average showed a firming trend.
"The trend is definitely up. Housing is going to make a small contribution to economic growth in 2012 and I would expect that home building will continue to improve through 2013," said Gus Faucher, senior economist at PNC Financial Services in Pittsburgh.
U.S. financial markets were little moved by the data as attention remained fixed on budget talks in Washington. Stocks were little changed, while prices for U.S. Treasury debt were trading higher. The dollar was broadly weak.
The housing market, one of the few bright spots in the economy, has regained some footing after a historic collapse that ignited the worst recession since the Great Depression.
The recovery is broad-based, with sales, home building and prices all showing gains. A report on Tuesday showed builders' confidence in the market for new single-family homes reached its highest level this month since April 2006.
While last month's decline in groundbreaking prompted some economists to trim already meager growth forecasts for the fourth quarter, homebuilding is expected to add to economic growth this year for the first time since 2005.
In the 12 months through November, housing starts were up 21.6 percent, while permits had gained 26.8 percent.
"More and more, the recovery is widespread. It is nice to see it happen," said Barry Rutenberg, a home builder from Gainesville, Florida, and chairman of the National Association of Home Builders.
SHIFT IN PSYCHOLOGY
Mortgage rates remain near record lows, helped by a program launched by the Federal Reserve in September to purchase mortgage-backed securities.
A separate report from the Mortgage Bankers Association showed demand for home loans fell last week as mortgage rates ticked higher. Applications for loans to buy a home had risen in each of the prior five weeks.
Though residential construction only accounts for about 2.5 percent of gross domestic product, economists estimate that for every single-family home built at least three full-time jobs are created.
Last month, permits to build single-family homes dipped 0.2 percent to a 565,000-unit pace. Permits for multi-family homes increased 10.6 percent to a 334,000-unit rate, reflecting buoyant demand for rental apartments.
"Longer term, we may have seen a shift in psychology, which is putting an extreme pressure on builders to provide multi-family homes. Young families are no longer clamoring to buy," said Lindsey Piegza, economist at FTN Financial in New York.
The step down in residential construction last month reflected a 5.2 percent drop in the Northeast, which was slammed by Superstorm Sandy in late October. Starts also tumbled in the West, where they were down 19.2 percent.
Last month, groundbreaking for single-family homes, the largest segment of the market, fell 4.1 percent to a 565,000-unit pace. Starts for multi-family homes slipped 1.0 percent to a 296,00-unit rate.
Economists said the pace of home construction was not keeping up with the bounce in household formation from recession lows, creating potential for upward momentum.
"We haven't been putting up enough housing to keep up with the expanding population. Given that, I would expect to see further improvement in home building in 2013," said PNC Financial's Faucher.
(Additional reporting by Ellen Freilich and Richard Leong in New York; Editing by Andrea Ricci and Tim Ahmann) By Canada For Trade
Obama and plan B to 2013 fiscal cliff: White House
Obama and plan B to 2013 fiscal cliff: White House
President Barack Obama would veto the House Republican "Plan B" tax proposal designed to avert January 1 tax hikes, the White House said on Wednesday, saying the plan does not do enough to balance spending cuts and tax increases.
The veto threat comes less than two weeks before a series of tax hikes and automatic budget cuts that could push the U.S. economy toward a so-called fiscal cliff and trigger another recession.
Republicans in the U.S. House of Representatives could vote on Thursday on a "Plan B" tax bill that House Speaker John Boehner said would extend low tax rates, except on income of $1 million and above.
The White House has said Obama would accept a deal that puts the threshold for income tax hikes at $400,000, a higher threshold than his initial offer.
"The President urges the Republican leadership to work with us to resolve remaining differences and find a reasonable solution to this situation today," White House Communications Director Dan Pfeiffer said in a statement.
(Reporting By Matt Spetalnick, Mark Felsenthal and Roberta Rampton; Editing by Alistair Bell and David Brunnstrom)
Republicans in the U.S. House of Representatives could vote on Thursday on a "Plan B" tax bill that House Speaker John Boehner said would extend low tax rates, except on income of $1 million and above.
The White House has said Obama would accept a deal that puts the threshold for income tax hikes at $400,000, a higher threshold than his initial offer.
"The President urges the Republican leadership to work with us to resolve remaining differences and find a reasonable solution to this situation today," White House Communications Director Dan Pfeiffer said in a statement.
(Reporting By Matt Spetalnick, Mark Felsenthal and Roberta Rampton; Editing by Alistair Bell and David Brunnstrom)
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