August 2015
Legislative Update
International Code Council

 

The NAHB has requested for our state and local associations to urge code enforcement officials to register them as Governmental Member Voting Representatives (GMVR) to the International Code Council's Remote Voting Program, see this link for more information. This program allows local officials and builders to have a voice in developing future codes. Because the registration process for the eligible voters beings in August, some of the HBA board members and staff have launched a campaign to meet with all code officials and representatives in the HBAGNO region. Their mission is to educate the code officials of the importance of remote voting, assisting them in the registration process, and also to disseminate the information on the NAHB's suggested stance on codes that will be voted on. To view the NAHB's talking points, please follow this link.

The HBAGNO has 12 voter districts that need to be covered in order to meet with all corresponding code enforcement officials. If you are interested in volunteering to attend these meetings, please contact Rita Bautista (Government Relations Representative) via email at Rita@home-builders.org, for more information.
Rate Rise in September?
Elliot Eisenberg
Elliot Eisenberg, Ph.D. is President of GraphsandLaughs, LLC and can be reached at Elliot@graphsandlaughs.com. His daily 70 word economics and policy blog can be seen at www.econ70.com. 
 

  

Rate Rise in September? 
Elliot Eisenberg, Ph.D.,  
GraphsandLaughs, LLC 
August 1, 2015

The Federal Reserve dropped the federal funds rate to zero in late 2008.  Never in their wildest imagination did they think that seven years later the rate would still be zero.  Of late, reasons the rate remains low include a rapid slowdown in Chinese growth, a tumbling Chinese stock market, the ongoing Greek crisis, and closer to home, very weak inflation and slow growth.  Despite these problems, the Fed will raise rates soon, quite possibly in mid-September.   

While China's GDP is now growing at a sub-7% rate for the first time in decades, outside of a small reduction in American exports to China and slightly weaker raw material prices, the impact of the slowing will be little felt by us.  As for the stock market swoon, it's important to note that equities play a minor role in the Chinese economy.  Fewer than 15% of Chinese household financial assets are in the stock market, and the value of all tradeable shares is about 30% of GDP, compared to 125% here.  As a result, just as the run up in prices had little impact on the real Chinese economy, the bust will be no different.  Also, the recent stock market sell-off, just like the previous one, is not a harbinger of economic decline.  

Looking to Europe, while Greece is likely to roil the EU for years, it is no larger economically than Oregon.  Moreover, because 83% of Greek debt is held by other European nations, the IMF and the ECB, only 17% is held by private banks.  Thus, even a complete Greek bankruptcy would do little damage to the rest of Europe.  This was evidenced during the run up to the snap referendum Prime Minister Tsipras recently called to improve his bargaining position.  It backfired as there was virtually no increase in volatility in European stock, bond and foreign exchange markets.  In terms of impact to the US, a slightly weaker euro will hurt exports marginally but there will be few, if any, other consequences.               

As for our economy, the unemployment rate is fast approaching 5% or full employment, and the labor market has hit its stride.  Last year, monthly employment growth averaged 260,000, the best since 1999, and so far this year it is averaging a respectable 208,000.  In 2013 it was 199,000 and in 2012 it was 188,000.  As you can see, monthly employment growth peaked in 2014, suggesting that there will be no more additional mass movement from the ranks of the unemployed to the working.  As for GDP growth, it was 2.4% last year, 2.3% in 2013, and has averaged 2.2% since the end of the recession.  Here too, there appears no indication that rapid GDP growth is right around the corner.  Finally, inflation, while very low, is finally starting to creep up and wage growth may see some increases in the near future.    

With foreign economic turbulence unlikely to impact the US, domestic GDP and employment growth not expected to meaningfully improve, and inflation and wages hopefully on the rise, there is no longer any reason for the Fed to wait before raising rates.  Moreover, by raising rates this September, the Fed will be able to wait several quarters before tightening again.  By contrast, if they wait to raise rates, they may be forced to increase rates rapidly, and that could be disruptive.  

 
Advanced Building Practices Council Open Meeting
This month's Advanced Building Practices Council meeting is open to all HBA members.  Join us for lunch and learn about the newest advances in renewable energy and how incorporating these technologies into your jobs can improve profits.

August 20th 
Noon @ the HBA office 
Speaker:  Tucker Crawford, South Coast Solar 
Member Rebate Program
The Member Rebate Program is a free member benefit of your State & Local Home Builders Association.

There are over 40 of the country's leading manufacturer brands participating in the Member Rebate Program.

Visit Member Benefits for more information, or CLICK HERE to view an online brochure with helpful information about the program.
From last month... 
Legislative Recap
June 16, 2015 marked the end of the 2015 Fiscal Legislative Session. HBAGNO's June general membership meeting hosted guest, Michelle Shirley, LHBA's state lobbyist. In her legislative recap, Michelle informed the HBA's members of the successes and failures of this session and which ones would affect the home building industry. She went on to discuss potential issues that could become problems for our industry in the Legislative session 2016. If you missed the meeting, the bills that were focused on by the LHBA can be found here.  


 
NAHB Webinar:  Confined Spaces
Got questions about confined spaces?  Get answers on July 7.

NAHB will host a free webinar on the Occupational Safety and Health Administration's (OSHA) new confined spaces rule on July 7 from 2-3 p.m. ET.

The New Confined Spaces in Construction: The Big Picture should help bring builders and developers up to speed on the requirements of the new rule, which goes into effect on Aug. 3.

atticJessica Douma, a regulatory analyst with OSHA's Directorate of Construction, will provide background on the new rule: 20 CFR 1926 Sub-part AA - Confined Spaces in Construction and general information about performing construction work in confined spaces.

She'll also address the relationship between the new construction standard and the general industry rule that has been in place since 1993, and cover the most pressing areas of concern for builders and remodelers.

If you miss the July 7 session, the webinar will be available for replay, along with additional resources in the NAHB Confined Spaces in Construction Toolkit.

Register today, or contact Rob Matuga for additional information. 
 
Economic Forecast:  Second Half of 2015
Elliot Eisenberg
Elliot Eisenberg, Ph.D. is President of GraphsandLaughs, LLC and can be reached at Elliot@graphsandlaughs.com. His daily 70 word economics and policy blog can be seen at www.econ70.com. 

  

The Economic Forecast for the Second Half of 2015: A Single, Possibly a Double but No Homeruns     

 

Elliot Eisenberg, Ph.D.,
GraphsandLaughs, LLC
June 2015

Despite GDP growth stalling in Q1, this time due to bad weather, a port strike on the west coast, a rising dollar and falling oil prices, the economic recovery remains intact.  The poor performance of the US economy from January through March was aberrant, and the incoming employment, housing, and service sector data all point to a modest economic pickup.  GDP growth the rest of the year should average 2.6%, with growth in Q2 closer to 1.75% as the economy slowly rebounds from a tough Q1.  An expected pick-up in wages and oil exploration activity and possibly increased corporate spending on plant and equipment suggest that 2015 will probably improve as it progresses.  

Despite falling energy prices, household spending has been very lackluster.  As a result, savings rates are up and spending on durable and non-durable goods has been weak.  Simultaneously, because the strong dollar has made US exports more costly abroad and imports cheaper here, manufacturing activity has slowed.  And due to falling oil prices, oil exploration has plummeted, with just 646 rigs in operation, down from a high of almost 1,600 eight months ago.  That said, rig counts have stopped falling and should start to rise as oil prices firm.  Moreover, the labor market continues to strengthen.  Voluntary quit rates are rising, the number involuntary terminations keeps falling, and job creation, while slightly down from last year, is strong.  At this rate of improvement, there will be little slack in the labor market a year from now.  

A definite economic bright spot thus far in 2015 has been housing, and that is due to rising household formation.  After averaging roughly 1.2 million annually from 1983 through 2006, household formation averaged just 600,000 through September 2014.  Since then, it has been rising at an annualized rate of 1.5 million.  Add to this increasing credit availability, and housing starts should reach an annualized average rate of 1.175 million during the second half of 2015, with new single-family construction contributing at a pace of 775,000 units and multifamily adding 400,000.  Despite being severely constrained by a lack of inventory, pending home sales are strengthening and existing home sales should continue rising by 6% annually as should home prices.       

As for inflation, it's benign but will likely slowly begin creeping up from its current anemic level.  The strong dollar will not strengthen further and oil will not weaken more, thus the trends that have exerted strong deflationary pressures on imports and energy respectively should dissipate.  Moreover, as the unemployment rate falls, labor shortages will become an increasing reality and that will cause wages to rise.  This should help household spending and encourage corporate investment.  However, slowly rising prices and wages, albeit from very low levels, will push the Fed to raise short-term rates late this year, probably in September but possibly in December.  The Fed will then raise rates very slowly thereafter due to weak global growth.  Long-term rates have bottomed and 10-yr Treasuries will end the year at close to 2.6% as the economy strengthens.

In short, the economy continues to grow modestly.  Short-term rates will start rising in the fall, wages are showing nascent signs of rising, and residential construction activity looks to strengthen as we go into 2016.  Most critically, continued solid job creation will keep the recent rise in household formation up and the likelihood of a recession during the next six months is zero.         
            
Have a wonderful summer and see you in August! (Remember, I will not be writing an article in July).

 
From the Department of Inspections & Code
Hurricane Season:

Hurricane season has already begun. Contractors and homeowners need to be conscientious of and take proper actions to secure construction site materials and debris.  Job sites should be kept clean and all trash placed in a container and covered or hauled away. A plan of action should be in place prior to a hurricane making landfall and all precautions taken. All building material and equipment should be properly stored and/or anchored.  Sanitary units should also be properly anchored. Anything that could become airborne becomes a danger to the health, safety, and welfare of loved ones and property.  Please be considerate of your customer and surrounding neighbors.

NAHB Online Courses Logo
2015 Senior Officers of the Board

President, Roy Olsen
Vice President, Floyd Simeon
Treasurer, Mike LeCorgne
Secretary, Frank Morse
Immediate Past President, Brian Mills

2015 Board of Directors

Steve Albert
John Arms
Fernando Arriola
Lori Barker
Nick Castjohn
Ric Darling
Nicole Dupre
Charlie Fontenelle
Eddie Gandolfi
Phil Hoffman
Kevin Katner
Jo Ann Kostik
Michael Kraft
Peter Lanaux
Ben Laws
Bruce Layburn
Harold LeBlanc
Scott Morse
Helmut Mundt
Randy Noel
Lynda Nugent Smith
Rolf Parelius
Zach Tyson
Kirk Williamson
Steve Wobbema
Wes Wyman
Peter Young

Also Supported By: 

2-10

 

August Calendar of Events
All Events held at HBA office unless otherwise noted 
 
6) Remodelers Council 
Noon @ the HBA 
Topic:  Home Hardening 
Click Here to RSVP.  
 
12) Education Committee Meeting.  2:30pm @ the HBA. 

18) HBA Board of Directors @ 4pm

20) Advanced Building Practices Council Meeting
Noon @ the HBA
Topic: Advances in Renewable Energy
This month's meeting is open to all HBA Members
Click Here to RSVP 

20) NHBA State of the Housing Market Seminar
Click here for flyer info. 
 
22) 2015 Kick-Ass Cookoff 
Featured Events
 
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August 22 
12th Annual
Kick-Ass Cookoff
3:30-7pm
Deutsches Haus

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HBA Staff Contacts

Jon Luther, Executive Vice President
Philip Thomas, Education Director & NOEL Program Director  philip@home-builders.org
Lauren Galliano, Director of Membership & Industry Relations   lauren@home-builders.org
Rita Bautista, Governmental Affairs Representative    rita@home-builders.org
Shane Gray, Accountant  shane@home-builders.org


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