Federal Reserve Chair Janet Yellen said Tuesday the central bank remains on course to pare its stimulus program despite a recent slowdown in job growth.
“We have to be very careful not to jump to conclusions” about recent weak job gains, she told the House Financial Services Committee as she delivered her first semi-annual testimony before Congress. She cited extreme winter weather that hobbled the economy and job market.
By the time the Fed next meets March 18-19, she said, Fed policymakers will be able to assess job growth in February, and will also look at a range of data, including consumer spending. Monthly job gains, which averaged more than 200,000 from August to November, slowed to 75,000 in December and 113,000 in January.
The Fed is buying $65 billion a month in Treasury bonds and mortgage-backed securities after reducing purchases by $10 billion in each of the past two months. Citing an acceleration in the economy and job gains, Yellen reiterated plans to trim purchases in “measured steps” this year.
She said it would take “a notable change in the outlook” for the Fed to pause its tapering strategy.
“It’s a fairly high bar to shake the Fed off the pattern it’s on,” says Barclays Capital economist Michael Gapen. He says Yellen’s testimony shows she may be more of a “centrist” as chair after being known as more concerned with stimulating job growth than preventing high inflation.
Yellen, who was previously vice chair, became the first woman to lead the central bank on Feb. 3, succeeding Ben Bernanke.
She downplayed concerns that the waning of the stimulus is partly responsible for emerging market woes as higher U.S. interest rates prompt investors to pull money from overseas holdings and shift it to the U.S. She said the Fed made clear it would pare purchases as the recovery advanced.
Yellen said the Fed expects the economy to expand “at a moderate pace” this year and in 2015 after picking up the second half of 2013. But with unemployment at 6.6 percent, she said the labor-market recovery “is far from complete.”
She is to testify before the Senate’s banking panel on Thursday.
Copyright © 2014 USA TODAY
The U.S. economy is headed for stronger growth in 2014 that will steadily chip away at the unemployment rate, top economists predict in a largely optimistic USA TODAY quarterly survey.
The jobless rate, which dipped to a five-year low of 6.6 percent in January, will fall to 6.3 percent by the year-end, their median forecast shows.
Job gains, which averaged 194,000 a month last year, will reach a monthly average of 200,000 this year, they predict. Employers added 113,000 jobs in January, well under economists’ forecasts, the government reported last week.
The economy got off to a slow start in January amid financial turmoil in emerging markets, a stomach-churning drop in stock prices and extreme winter weather that kept many shoppers at home. But the economists surveyed expect growth to accelerate after a weak first quarter, reaching a solid 2.8 percent rate for the year.
“I think we will regain momentum and not fall on our face,” says economist Diane Swonk of Mesirow Financial, drawing a contrast with previous ups and downs in the 5-year-old recovery.
Many of the 40 economists surveyed Feb. 5-6 recently cut their first-quarter forecasts. Most of the change is due to adverse weather and an expected pull-back in business stockpiling after firms aggressively replenished shelves in the second half of 2013.
While growth late last year was driven by the stockpiling, this year’s expansion will be fueled by higher consumer and business spending, says Dean Maki of Barclays Capital. “It’s more durable.”
Many were anticipating a breakout year in 2014, signaling a new course for a sluggish recovery. Households have shed much of the debt they amassed in the mid-2000s real estate bubble. A stock run-up and rising home prices have made consumers feel wealthier. And the effects of federal spending cuts and tax hikes are fading, while state and local governments are poised to boost outlays after years of austerity.
Some see financial troubles in emerging markets such as Turkey as risks to the USA’s outlook. But 64 percent said their 2014 forecasts are more likely to prove too conservative than too rosy.
Copyright © 2014 USA TODAY, Paul Davidson, and Barbara Hansen
Chinese investors broke sales records in their drive to purchase U.S. commercial real estate in 2013, and analysts expect they will remain active in the global market, with untapped billions more to invest in coming years.
The U.S. real estate market attracted $3.1 billion of capital from China last year -- an increase of more than 900% from just $264 million invested in 2012, according Jones Lang LaSalle.
New York attracted the most money from China last year as Chinese investors poured $2.9 billion to buy property in the global capital, representing a considerable increase over the 2012 investment level of $200 million.
"There was a dramatic increase in the amount of Chinese investment in U.S. real estate in 2013, with transaction volumes more than tripling the previous high year,” said Rob Hielscher, managing director, Jones Lang LaSalle’s International Capital Group.
Migration for investment in overseas real estate markets has become a top choice for Chinese applicants, according to a report on China's capital migration status released by a Chinese think tank last week.
The Annual Report on Chinese International Migration 2014 found that a growing number of Chinese investors are rushing to go abroad in order to buy properties in places like North America.
The report, put out by the Center for China and Globalization and the Social Sciences Academic Press, noted that in 2011, China became the second-largest overseas property buyer in the United States.
Copyright © 2014 CoStar Realty Information, Inc.
Warehouses are becoming a commercial real estate boon, as more retailers beef up their online business.
Online retailers such as Amazon are leading the trend, snapping up spaces for smaller distribution centers near major urban areas in an effort to get products closer to where people live, says Sam Chandan of Chandan Economics.
Warehouses are “some of the best performing space that we see in commercial real estate right now, across all property types,” Chandan told CNBC news.
The latest PWC Investor Survey pinpointed warehouses as the strongest prospect for investment and development in 2014.
Housing analysts expect other companies to follow Amazon’s lead in purchasing warehouses near urban areas. "Small mom-and-pops are getting into the e-commerce game now as well," says Frank Cohen, senior managing director for Blackstone’s Real Estate Group.
Warehouse development is on the rise, and there has been an increase in speculative building, too. About 62 percent of the 59 million square feet under construction by the end of the third quarter in 2013 was being constructed without signed tenants, according to a report by CoStar, a commercial data firm.
Source: “Real Estate’s Least Sexy Sector Is Red Hot,” CNBC (Jan. 22, 2014)
