Housing starts fell again in February, inching lower by 0.2% from January. That’s the third monthly decline in a row. The rate of descent is slowing, which constitutes the only good news for this data series these days, but that’s more than offset by the fact that for the first time since 2009 the number of starts (seasonally adjusted annual rate) has slipped for three straight months. That’s a worrisome sign, but it’s premature to assume the worst. Indeed, the sight of a healthy upturn in the number of newly issued housing permits last month holds out the possibility that there may be a spring thaw waiting in the wings for starts.
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The contentious vote on Sunday in Crimea to secede from Ukraine and join Russia prompted the US and Europe to impose limited sanctions and restrictions on Russian officials, but markets yesterday shrugged off the event. Apparently the risk tied to Russia’s annexation of Crimea—an act that the West decries as illegal—is already priced into assets. But while the first act in this provocative narrative has been surprisingly calm, it’s a mistake to assume that the worst has passed. One side has to blink eventually, but at the moment the odds are low for expecting someone to back down. That raises the likelihood that a long, slow grind in a new East-West standoff is coming, with all the trimmings, including the threat of economic turmoil that’s lurking just below the surface.
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