US ECONOMY & POLITICS

Multi-family housing segment boosts U.S. homebuilding in August – Reuters, 9/21/2021

• U.S. homebuilding increased more than expected in August, but sustained weakness in single-family projects suggested builders continued to struggle with higher input costs as well as labor and land shortages.
• Housing starts advanced 3.9% to a seasonally adjusted annual rate of 1.615 million units last month, the Commerce Department said on Tuesday. Data for July was revised up to a rate of 1.554 million units from the previously reported 1.534 million units.
• Single-family starts, which account for the largest share of the housing market, dropped 2.8% to a rate of 1.076 million units. That was the second straight monthly decline.
• Starts for buildings with five units or more soared 21.6% to a rate of 530,000 units. The multi-family housing segment is being boosted by demand for rentals as COVID-19 vaccinations allow companies to recall workers to offices in city centers.
• Permits for future homebuilding rose 6.0% to a rate of 1.728 million units in August. Single-family permits gained 0.6% to a rate of 1.054 million units. Permits for buildings with five units or more jumped 19.7% to 632,000.

U.S. current account deficit widens to 14-year high in second quarter – Reuters, 9/21/2021

• The U.S. current account deficit increased to a 14-year high in the second quarter as businesses boosted imports to replenish depleted inventories amid robust consumer spending.
• The Commerce Department said on Tuesday the current account deficit, which measures the flow of goods, services and investments into and out of the country, rose 0.5% to $190.3 billion last quarter.
• That was the largest shortfall since the second quarter of 2007.
• Data for the first quarter was revised to show a $189.4 billion gap, instead of $195.7 billion as previously reported.
• The current account gap represented 3.3% of gross domestic product last quarter. That was down from 3.4% in the January-March quarter.
• Imports of goods increased $29.0 billion to $706.3 billion, primarily reflecting an increase in industrial supplies and materials, mostly petroleum products as well as metals and nonmetallic products.
• Exports of goods rose $28.3 billion to $436.6 billion, lifted by industrial supplies and materials such as petroleum products.
• Imports of services increased $9.1 billion to $127.8 billion, mostly reflecting increases in sea freight and air passenger transport as well as other personal travel.
• Exports of services increased $7.6 billion to $189.1 billion. They were driven by personal travel.

Democrats Add Debt Limit to Spending Measure, Sparking Showdown With GOP – Wall Street Journal, 9/21/2021

• Democratic leaders said Monday they would attach a suspension of the debt limit through December 2022 to a short-term spending bill, setting up a clash with Republicans over preventing both a partial government shutdown and a potential default on U.S. debt.
• The House is expected to vote on the combined measure this week, but GOP opposition in the Senate cast uncertainty over how and when lawmakers will act to prevent the federal government from running out of cash.
• Many Republicans said Monday they wouldn’t supply any votes for an effort to raise the government’s borrowing limit in protest to Democrats’ plans to move trillions of dollars in new spending through Congress.
• Raising the debt limit doesn’t authorize new spending, but rather allows the Treasury Department to issue new debt to cover spending that Congress already has authorized, including payments to bondholders, Social Security recipients and veterans.

Fed Faces Calls to Remove Officials Over Trades They Made While Setting Policy – Wall Street Journal, 9/21/2021

• Two advocacy groups said two senior Federal Reserve officials who traded stocks and other investments while setting monetary policy should lose their jobs, while a former senior Fed adviser said one of the men should be fired and the other should take leave pending an investigation.
• Federal Reserve Bank of Dallas President Robert Kaplan Federal Reserve Bank of Boston leader Eric Rosengren actively traded in markets in 2020, a year dominated by major Fed interventions to help save the economy during the coronavirus pandemic, according to financial disclosure forms recently made available by their banks.
• The Fed said after the disclosures it would review its rules around trading rules by officials.
• Better Markets, a group that pushes for tighter financial regulation; the left-leaning Center for Popular Democracy’s Fed Up campaign; and Andrew Levin, a former top Federal Reserve staff member and now a professor at Dartmouth College, are calling for the Fed to take action against Messrs. Kaplan and Rosengren.
• “It’s time for the Fed to do what leaders are supposed to do:  Lead by example,” Better Markets president and chief executive officer Dennis Kelleher wrote in a letter sent to Fed Chairman Jerome Powell Tuesday.

Biden Addresses U.N. General Assembly as Some U.S. Alliances Face Strain – Wall Street Journal, 9/21/2021

• President Biden outlined a U.S. foreign-policy vision rooted in diplomacy and global alliances during his first address to the United Nations as commander-in-chief, calling for a shift away from armed conflict after two decades of war in Afghanistan and the Middle East.
• At a moment when some U.S. alliances are facing strain, Mr. Biden made the case that the biggest issues facing the world—from the coronavirus pandemic to climate change—can only be solved with cooperation among countries with varying national interests.
• In recent weeks, Mr. Biden has faced criticism both at home and abroad for how the U.S. withdrew troops from Afghanistan as well as a drone strike that mistakenly killed Afghan civilians.
• The Biden administration has been working to shift international focus to Asia and counter China’s global influence.
• Mr. Biden will convene a summit Friday with the leaders of Australia, India and Japan—an alliance called the Quad—and hold one-on-one meetings with the countries’ leaders.

EUROPE & WORLD

UK manufacturing orders gauge hits record high in September: CBI – Reuters, 9/21/2021

• A record share of British manufacturers reported rising new orders this month but global supply chain problems and labour shortages held back growth in output, a survey showed on Tuesday.
• The Confederation of British Industry’s monthly manufacturing order book balance rose to +22 in September from +18 in August, its highest level since records started in 1977.
• Still, the picture was weaker for export orders – which grew at their fastest since March 2019 – and the survey’s gauge of output growth fell to its lowest level since April.
• The survey’s gauge of price expectations cooled to a four-month low, but CBI deputy chief economist Anna Leach warned manufacturers still faced rocketing energy prices.

Evergrande Declines Further After S&P Says Default Is Likely – Bloomberg, 9/21/2021

• China Evergrande Group slid deeper in equity and credit markets Tuesday, fueling concerns about broader contagion after S&P Global Ratings said the developer is on the brink of default.
• The distressed developer’s shares in Hong Kong dropped as much as 7% before finishing down just 0.4%, still settling near a 10-year closing low.
• Its 8.25% dollar bond due 2022 fell 0.3 cent to 24.9 cents, leaving it down some 75% since late May. The junk-rated company is the biggest issuer of high-yield notes in Asia.
• “We believe Beijing would only be compelled to step in if there is a far-reaching contagion causing multiple major developers to fail and posing systemic risks to the economy,” according to an S&P report dated Sept. 20. “Evergrande failing alone would unlikely result in such a scenario.”
• Chinese authorities previously told major lenders not to expect repayment of interest on bank loans due this week. Interest also comes due Thursday on two of the developer’s bonds.

House prices a persistent pressure on euro zone inflation, ECB study shows – Reuters, 9/21/2021

• House prices, now excluded from euro zone inflation data, would have persistently raised consumer prices in recent years, a study published by the European Central Bank showed on Tuesday, highlighting policymakers’ unease with the current indicator.
• Once corrected for housing costs, euro zone inflation would have hit or even exceeded the ECB’s target some years, even as the bank was providing extraordinary stimulus to raise prices, figures from the study showed.
• The paper, part of the ECB’s recent strategy review, concluded that housing costs would have led to “persistently higher” inflation since around 2014 and between 2018 and 2020, inflation would have been around 0.2-0.3 percentage points higher.
• Although the ECB does not calculate inflation data, it said in July that it would consider estimates on the cost of owner-occupied housing on inflation until Eurostat, the EU’s statistics agency, fixes the broader measure.
• Over two decades, however, the adjusted inflation figure would have been little different, the study argued, as housing costs could have been a drag on prices.

Canada’s Justin Trudeau Headed for Victory but No Majority – Wall Street Journal, 9/21/2021

• Canadian Prime Minister Justin Trudeau was headed toward a third straight electoral victory Tuesday morning, although his bet that a snap vote would help him secure a majority government failed to materialize.
• Both Canada’s CTV Network and the Canadian Broadcasting Corp. projected the incumbent Liberal Party was set to win enough seats in parliament to form a minority government.
• As of Tuesday morning, the Liberals were leading in 158 electoral districts, short of the 170 needed for a majority in parliament. The Conservative Party, led by Erin O’Toole, was running second with 119 seats.
• The results are based on over 98% of polls reporting. In 2019 national vote, the Liberals won 157 seats and the Conservative Party 121.

Europe’s low-cost carriers to drive jet demand over next 20 yrs -Boeing – Reuters, 9/21/2021

• Planemaker Boeing said that European low-cost carriers would help drive demand for new aircraft in the region over the next 20 years, as airlines replace their ageing fleets with more fuel-efficient jets.
• Boeing said on Tuesday that it expects airlines in Europe to order 7,100 new single-aisle planes, usually used for short haul trips, between now and 2040, with low-cost specialists like Ryanair behind that demand.
• In fact, Europe’s demand for planes will be even more strongly driven by low-cost carriers than elsewhere in the world, said Boeing vice president, commercial marketing Darren Hulst.
• “Globally our forecast in general is about 40% of single aisle demand is low-cost carrier, and I would say you could argue in this European space that number would be slightly higher,” he told a press briefing.

Lebanon’s Inflation Rises to Highest Globally as Crisis Deepens – Bloomberg, 9/21/2021

• Lebanon’s annual rate of inflation has risen to the highest of all countries tracked by Bloomberg, surpassing Zimbabwe and Venezuela, as the financial meltdown in the Middle East nation worsens.
• The consumer price index rose to 137.8% from a year earlier in August, compared with 123.4% in July, according to the Lebanon Central Administration of Statistics. Consumer prices rose 10.25% from a month earlier while food prices rose 20.82%.
• The currency has lost nearly 90% of its value and plunged three quarters of residents into poverty.

Factmonster – TODAY in HISTORY

• The Hobbit by J.R.R. Tolkein was first published. (1937)
• A hurricane struck New York and New England with extensive damage and more than 600 deaths. (1938)
• The People’s Republic of China was proclaimed. (1949)