Happy Fed Day! Ed’s Daily Notes for July 30th   Leave a comment

janet-yellen-money-printer

And what a Fed Day it is! We open with the U.S. 2nd Quarter GDP report at 8:30 am EST, before getting the Federal Reserve’s Open Market Committee meeting announcement at 2 pm EST.

Bloomberg: Housing Market in France in ‘Meltdown’ After Hollande Rent Caps

For those of you looking for government to solve all problems, take a lesson from France:

French President Francois Hollande’s government may have made a housing slump worse, pushing the construction market to its lowest in more than 15 years.

Housing starts fell 19 percent in the second quarter from a year earlier, and permits — a gauge of future construction — dropped 13 percent, the French Housing Ministry said yesterday.

The rout stems from a law this year that seeks to make housing more affordable by capping rents in expensive neighborhoods. To protect home buyers, the law also boosted the number of documents that must be provided by sellers, leading to a decline in home sales and longer transaction times. While the government is now adjusting the rules, the damage is done, threatening France’s anemic recovery that’s already lagging behind those of the U.K. and Germany.

“Construction is in total meltdown,” said Dominique Barbet, an economist at BNP Paribas in Paris. “It’s difficult to see how the new housing law is not to blame.”

Barbet says the drop in home building lopped 0.4 points off France’s gross domestic product growth last year and cut the pace of expansion by a third in the first quarter. Expenditure in the sector was at its lowest level ever as a portion of total real GDP in the first quarter at 4.7 percent, down from 6.3 percent in the first three months of 2007, he estimates.

Sales of new-build homes fell 5 percent in the first quarter from a year earlier and are down by about a third compared with their level in 2007, according to Credit Agricole.

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Posted July 30, 2014 by edmcgon in Economy, Federal Reserve, News, Real Estate

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