Photograph by Julio Cortez/AP Photo

People stand behind a barricade while they wait to catch a glimpse of Britain’s Prince Harry, who is expected to visit Casino Pier during a tour of the area hit by Superstorm Sandy, on May 14, 2013, in Seaside Heights, N.J.

After the biggest Atlantic storm on record struck the New Jersey shore last October, Seaside Heights Mayor William Akers was asked repeatedly if the town would rebuild in time to welcome summer tourists. “Oh, no problem,”he’d reply.

“The truth of the matter,” he says now, “is I had no idea.”

So for Akers it comes as a relief, six months after superstorm Sandy slammed into his 100-year-old borough, to see signs of a revival along his part of the Jersey shore. Rental property owners, boardwalk vendors and the municipality’s beach managers are planning to hire just as much summer help as they did last year. Local officials say a visit by Britain’s Prince Harry today — he has arrived this morning ahead of the traditional Memorial Day kick-off of the beach season — may help boost awareness that the Jersey shore is open for business.

“Not being open would be fatal to Seaside Heights,” said Akers, 57.

This is not a scene from “When Harry met Snooki.”

Businesses near the Seaside Heights have tried to capitalize on the popularity of MTV’s show “Jersey Shore,” — whose cast of characters included Nicole “Snooki” Polizzi — and, since Sandy, gawkers have snapped photos of the Jet Star roller coaster submerged in the ocean — which is to be hauled away soon.

A comeback for the Jersey shore is critical for a state where tourism accounted for 10 percent of employment last year. New Jersey’s jobless rate of 9 percent in March stood above the national rate of 7.6 percent at the time. The tourism jobs reinforce an improving labor market for New Jersey, which has added about 3,300 construction jobs since the storm, with increases in four out of the five months through March.

Rebuilding after Sandy could add 0.4 percentage point to U.S. growth this year, making up more than half the 0.75 percentage point that construction will add to gross domestic product, said Bernard Baumohl, chief global economist at Economic Outlook Group LLC, a Princeton, New Jersey-based forecasting firm.

“While the destruction has been a detriment to some, it’s been a boom for others,” Akers said.

In Seaside Heights, the images Akers recalls from a nighttime tour of his borough in a military vehicle — floating cars and a house washed into the middle of the street — have been replaced by the scene of workers laying the final planks on the fresh mile-long boardwalk.

The progress might be the payoff from better preparation for natural disasters in the wake of Hurricane Katrina in 2005, said Kathleen Tierney, director of the Natural Hazards Center at the University of Colorado at Boulder.

“There was a real effort to put resources into the Sandy-affected areas not only after impact but prepositioning things before impact and already starting to think about recovery,”Tierney said.

See the full Seaside Heights report at Bloomberg.com .

Original post is Prince Harry: Jersey Shore Open for Business Post-Sandy by Political Capital.

Photograph by Scott Eells/Bloomberg

A welder welding the frame of a modular housing unit at the Brooklyn Navy Yard in the Brooklyn borough of New York.

The lower-than-expected reading this morning for U.S. economic growth in the first quarter has revealed a few victims even as growth picked up — among them, factories.

“Manufacturing activity remains weak relative to the larger economy,” in part due to federal budget cuts and tax increases, Chad Moutray, chief economist at the National Association of Manufacturers, said in a statement after the GDP release. “We need to get back to a position where the manufacturing sector is once again making significant contributions to output and employment. This means that we need higher GDP growth to get back on track.”

The U.S. economy grew less than forecast in the first quarter as a drop in defense outlays undercut the biggest increase in consumer spending in two years. Business investment also slowed. GDP rose at a 2.5 percent annual rate, lower than forecast, after a 0.4 percent fourth-quarter advance, according to the Commerce Department data.

The GDP figures cap a week of slumping production data, including readings from the Kansas City and Richmond Federal Reserve banks showing contraction in those regions. The Markit Economics preliminary index of U.S. manufacturing fell to 52 in April from a final reading of 54.6 a month earlier, the London-based group said earlier this week.

Disappointing April production figures from the Euro zone, Germany and China are also weighing on the U.S., Scott Anderson, chief economist at Bank of the West in San Francisco, said in a research note.

“The data suggest the U.S. economy is participating in a synchronized global manufacturing slowdown,” Anderson said.

Next week will bring results from the Dallas Federal Reserve, Chicago’s business barometer and the Institute for Supply Management’s manufacturing survey. This will confirm if things are indeed turning for the worse.

Original post is Behind the Growth: Manufacturing Lags by Political Capital.

If the economy is cooling, consumers aren’t noticing.

The Bloomberg Consumer Comfort Index climbed to minus 29.2 in the week ended April 14, the highest since January 2008, from minus 34 in the prior period. The jump was the biggest in more than a year, with nearly every category across age, region and income advancing.

Americans were most upbeat about their personal finances, with that measure climbing to its highest level since July. Respondents’ views on the state of the economy are at a more than five-year high, and an index of whether they consider it a good time to make purchases reached its highest in four months.

`The question is whether consumer sentiment can maintain enough momentum to keep pushing on up,” Gary Langer, president of Langer Research Associates in New York, which compiles the index for Bloomberg, said in a statement. “Recent trends – a down January, an up February, a mostly flat March, now this surge – suggest a bumpy ride, but at least one that’s headed in the right direction.”

The comfort index can range from 100, indicating every participant in the survey had a positive response to all three components, to minus 100, signaling all views were negative.

Original post is Consumers Most Confident in Five Years by Political Capital.

Photograph by Ty Wright/Bloomberg

Home sales at the River Valley Highlands neighborhood in Lancaster, Ohio.

If you want to own a house, it may pay to be less educated.

Homeownership rates among 30-year-olds with student debt plunged in 2012 more than for those without, according to an analysis published today by researchers at the New York Federal Reserve. The report shows the recession has actually hampered purchasing activity more for those with higher education, reversing the trend in place since at least 2002.

Home-secured debt for both categories of young adults sank during the recession that ended in June 2009, the New York Fed research shows. While those without student debt saw homeownership decline by 5 percentage points, those with it saw a 10 percentage-point drop. By last year, the rate for student debtors was almost 2 percentage points lower than for those without it.

Between 2003 and 2009, student debt holders had “significantly higher” rates of homeownership, owing to the stronger incomes associated with the higher education.

Two recession-induced factors could be to blame for the diploma’s prospective drop in value: tightened access to credit in the wake of the subprime mortgage collapse that triggered the economic slowdown, and depressed expectations of future earnings. If the pattern holds, it could restrain recovery in the housing and auto industries, as well as consumer spending more broadly, the researchers note.

“While highly skilled young workers have traditionally provided a vital influx of new, affluent consumers to U.S. housing and auto markets, unprecedented student debt may dampen their influence in today’s marketplace,” according to the commentary.

Original post is Home-buying? Forgo College by Political Capital.

That’s the conclusion of Sam Coffin, an economist for UBS Securities LLC in Stamford, Connecticut, as he explores pent-up demand in housing ahead of home construction numbers set for release tomorrow.

Household formation, which has been held back by the lowest level of child-bearing since at least 1960 and delayed marriages, is starting to pick up, says Coffin. That means that housing starts, which usually outpace household formation, will soon follow, he says

The key swing factors include additional progress in the labor market and a related adjustment in living preferences — including fewer young workers “doubling up,” or living under one roof. If the most recent trend of 18-34 year-olds moving out on their own continues, it could provide positive spillover effects for rentals, marriages and births, according to the UBS economist.

Economic growth and household formation are running so far below potential that a catch-up is almost inevitable, says Coffin. The research has reinforced their confidence in a bullish 3 percent forecast for 2014 GDP, “with risks now appearing somewhat skewed to the upside,” according to the note.

Unleashing the pent-up demand for housing would contribute as much as 1 percentage point in additional annual consumer spending growth, Coffin estimates. The firm’s research has also convinced the economists to revise housing starts forecasts up by 100,000 units to 1.1 million for 2013 and 1.35 million in 2014.

Housing starts are forecast to have risen to a 930,000 annual rate in March from 917,000 the prior month, according to the Bloomberg survey median ahead of Commerce Department data released tomorrow.

Original post is Housing Glass Half-Full: UBS Economist by Political Capital.

Photograph by Victor J. Blue/ Bloomberg

Pedestrians carry shopping bags on Fifth Avenue in New York.

The grades are still low, but they’re better than last year.

While Washington policy makers are being blamed for sequestration and the budget impasse, Americans this year are registering improving confidence in their leaders’ ability to “do or to recommend the right thing for the economy,” according to an annual Gallup poll released today.

All four parties — President Barack Obama, Federal Reserve Chairman Ben Bernanke, and Democratic and Republican leaders in Congress — earned higher marks from respondents than last year, with Obama taking the top spot. Gallup conducted telephone interviews with 1,005 adults from April 4-7.

Fifty-seven percent of those polled trusted the president a “great deal” or “fair amount” on the economy, breaking above the 50-percent line for the first time in three years.

Fewer than half of Americans surveyed felt the same about the other officials. Democratic leaders stood at 48 percent, Bernanke at 42 percent and Republicans at 39 percent.

Bernanke’s tally marked his first improvement since 2009, shortly after the Fed embarked on what has become unprecedented quantitative easing that has ballooned the central bank’s balance sheet to $3.2 trillion in efforts to spur the recovery.

The chairman’s term ends Jan. 31, and speculation is that he’ll be succeeded by Vice Chairman Janet Yellen. She’s favored among 65 percent of fund managers polled, according to the results of a survey by International Strategy & Investment Group issued last week. Sixteen percent bet Bernanke would be reappointed.

“Bernanke is generally seen as a powerful force for economic stability in the global financial markets, but this may not be enough for him to be reappointed, particularly if the U.S. economy goes into another economic swoon this spring,” according to the Gallup release.

Thirty-four of 43 economists polled by Bloomberg are projecting a slowing of U.S. growth in the second quarter from the first three months of the year, according to survey results released today.

“A lot of this has to do with where your assumptions are on sequestration,” said Neil Dutta, head of U.S. economics at Renaissance Macro Research LLC in New York. “If you assume that the impact is immediate, as most of us do, then the second quarter will be weak,” with budget cuts contributing to a “choppiness” in the data over the next few months.

Original post is Americans Critical of Economic Stewardship — Though Less So by Political Capital.

Photograph by Victor J. Blue/Bloomberg

Members of the media are reflected in the window of the One World Trade Center observation deck as the Manhattan skyline stands in New York on April 2, 2013.

While recent economic indicators, including a disappointing payrolls report last week, have spoiled the party of early-year gains, the nascent housing recovery may once again offer a reason for optimism elsewhere in the expansion.

Retail office space and other commercial real estate, including apartments and industrial buildings, are poised to track the residential property growth that’s finally cracking pre-recession levels, according to a research note today released by James Marple, senior economist at TD Economics, an affiliate of the Toronto-based TD Bank.

The retail office sector, first disrupted by the Amazon.coms and eBays and further slammed by a drop in consumer spending during the economic downturn, is set to regain its footing after being overbuilt prior to the recession, according to the report.

“While online competition will continue to be a headwind for the retail sector, the outlook is still positive, given its close correlation to housing,” Marple said in the report. “Growth in retail investment tends to follow residential investment with a lag of about a year, and housing is expected to grow by over 15 percent over the next two years.”

Retail office space may especially be helped by demand in suburbia, where residential growth hasn’t yet reached the levels of higher-density areas whose multi-family properties are rebounding. As more customers move to the single-family areas, the brick-and-mortar retail should follow.

A pickup in residential construction probably will lead to a bigger addition to U.S. growth this year than in 2012, when it contributed for the first time in seven years. Sales of new homes in February capped the best two back-to-back months in more than four years, Commerce Department data show. Builders began work on more houses in Februarym and permits for future construction climbed to an annual pace of 917,000, the highest level in almost five years.

“As the housing recovery gains steam and economic and job growth accelerates, vacancy rates will show more meaning­ful improvement, giving support to prices and investment,” Marple wrote. “This should become more apparent in 2014, as employ­ment momentum and vacancy rates move closer to historic levels.”

Original post is Real Estate: Silver Lining of Cloudy Economy by Political Capital.

Photograph by Daniel Acker/Bloomberg

Potential buyers view a new home under construction in South Barrington, Illinois.

Congress may be on the verge of accidentally helping the economy.

Washington lawmakers haven’t been able to compromise on ways to avert broad-based federal spending cuts, whether and how to implement unprecedented health-care changes or how to help rescue the ailing 238-year-old Postal Service. Yet the promise of bipartisan negotiations to overhaul the U.S. immigration system may spur the sort of acceleration in the housing market that would push the economic recovery into a higher gear.

The number of foreign-born homeowners will increase by 2.8 million in the decade ending 2020, compared with a 2.4 million gain in the previous 10 years, according to a Mortgage Bankers Association study that didn’t assess the potential impact of any new legislation.

Research by a group of Hispanic real-estate agents estimates that putting undocumented workers on a path to citizenship, which is the centerpiece of immigration legislation under debate in Congress, may generate about 3 million more home-buyers over the next several years.

“We’ve probably under-appreciated this powerful force that is already resident here and is so upwardly mobile that it pushes up the housing market from the bottom,” said Dowell Myers, author of the MBA study and a public policy professor at the University of Southern California who studies housing demography.

Immigrants, who hold more positive views toward owning a home than native-born Americans, are increasingly likely to buy a house the longer they live in the U.S. and the more prosperous they become, the research shows. Their upward mobility is evident in the MBA data showing the share of those arriving in the 1980s who became homeowners rose by about 35 percentage points over the next three decades even as the longest recession since the Great Depression took a toll.

Fifty-six percent of Hispanic Americans, who according to Census data make up more than half of foreign-born residents in the U.S., said a “major” reason to buy a house is that it’s a “symbol of success or achievement,” a 2011 survey data from Washington-based Fannie Mae showed. The share for all Americans giving the same response was 32 percent.

Two obstacles to the nascent housing recovery could spoil the party. Still-strict lending standards five years after the sub-prime mortgage crisis triggered the last recession are a particular hurdle for foreign-born first-time home-buyers. And the supply of homes for sale is especially dry in a handful of states with high immigrant populations, including California and Nevada.

Even so, for immigrants, “the first dream is to own the place you live in,” said Maria Fiorini Ramirez, founder and chief executive officer of her eponymous economic and financial consulting firm and a native of San Giuseppe Vesuviano, Italy. And amid the obstacles, she said,“home ownership in the U.S. is probably the easiest in the world,” particularly compared to Italy, where “lots of red tape” can hold up a home purchase for years.

Original post is Housing Boost: ‘Born Outside the USA’ by Political Capital.

Photograph by Daniel Acker/Bloomberg

A tack welder in Dubuque, Iowa.

At first glance, manufacturing seemed to show signs of bipolarity in today’s economic releases.

The Federal Reserve in Washington reported that production in manufacturing dropped 0.4 percent in January. That followed big back-to-back gains of 1.7 percent in November and 1.1 percent in December. Normally such a number would raise concerns that manufacturing is slipping back into the doldrums.

But the February report from the Federal Reserve Bank of New York’s Empire State index tells a different story. It climbed to 10 this month, up from minus 7.8 in January, exceeding all forecasts in a Bloomberg survey and showing the biggest improvement since May.

The February numbers are making some analysts downright optimistic about manufacturing, which accounts for about 12 percent of the economy.

“Manufacturing should be a source of growth this year,” said Joseph LaVorgna, chief  U.S. economist at Deutsche Bank Securities Inc. in New York, whose forecast matched the highest for the New York index in the Bloomberg survey. “We are having to reevaluate the phenomenal resiliency of the U.S. economy and perhaps its ability to outstrip expectations.”

Prospects for an uptick in demand for U.S. factories are supported by other figures today, indicating that consumer sentiment has held up even as paychecks are trimmed by higher taxes. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment climbed to 76.3 in February, a three-month high, from 73.8 the prior month.

Original post is Factories Show February Strength by Political Capital.

The MNI Chicago Report’s business barometer for December was up for a second month, rising to 51.6 in December from 50.4 the previous month. A reading of 50 is the dividing line between expansion and contraction.

Still, the positive reading may be outweighed by discouraging figures in the sub-indices of the report, including an employment gauge that registered its lowest level since November 2009. Business owners have been hesitant to invest and hire as they await a deal in negotiations to avert automatic tax increases and government spending cuts slated to start Jan. 1.

“Employment caved in big time, and that shows reluctance to hire amid all the uncertainty we have and the fact that activity is still pretty weak,” said Sean Incremona, senior economist at 4Cast Inc. in New York, who forecast a rise in the index to 51.5.

The MNI report corroborates a stronger-than-expected reading in the Dec. 20 Philadelphia manufacturing survey, which showed the largest expansion in eight months. Yet an index of business activity in the New York area contracted in December for a fifth straight month.

“There’s just not a lot of momentum one way or another in the manufacturing sector,” said Tom Simons, an economist at Jefferies Group Inc. in New York. The industry “doesn’t look like it’s going to be fueling the recovery again anytime soon. If there is a break in the fiscal cliff talks and confidence returns quickly, that all is sort of moot, but that doesn’t look likely at this point.”

The more than three-year low in the employment measure of the Chicago report was released one week before the Labor Department’s monthly payroll data. A Bloomberg survey of 43 economists shows a median estimate of 150,000 new jobs in December compared to last month’s 146,000.

Original post is Hiring on Hold as Businesses Watch Talks in Washington by Political Capital.