• INDICATOR: December Existing Home Sales and January Philadelphia Fed NonManufacturing Survey
• KEY DATA: Sales: -2.8%; Prices (Over-Year): 4%/ Phil. Fed (NonManufacturing): +18.2 points; Expectations: +7.3 points
• IN A NUTSHELL: “The dip in housing sales is more a sign of the lack of homes to be bought than the desire to buy homes.”
• WHAT IT MEANS: While the housing sector has come a long way in the past six years, it is still can have its ups and downs. The National Association of Realtors reported that existing home sales moderated in December, though the decline was nothing significant. Given that the November rate was the highest in nearly a decade, a small drop isn’t worrisome. Condo sales fell sharply while single-family purchases were off more modestly. Three of the four regions posted declines with the South flat, so weather cannot be the excuse. As for prices, they were up decently. But the real story in the report was the continued decline in inventory. The number of homes on the market hit its lowest level since the NAR started collecting the data, which was 1999. It is hard to sell homes that are not for sale.
  
  The Philadelphia Federal Reserve Bank’s January survey of nonmanufacturing firms was quite a surprise. While the activity index is pretty volatile, the surge in the current economic conditions index was huge. Orders jumped, revenues soared and hiring picked up – but only for full time workers. Interestingly, the demand for part-timers grew less rapidly. While the greater Philadelphia region may not be the fastest growing area in the nation, unemployment rates have been coming down. Firms may be switching part-timers to full-time when they cannot find qualified workers to fill open positions. Looking forward, the expectations index hit is highest level in the nearly six years this survey has been in existence. That bodes well for future hiring and investment.
  
  MARKETS AND FED POLICY IMPLICATIONS: The Trump administration hit the ground running, but what all those executive orders mean for the economy is unclear. Easing pressures created by Obamacare may sound good, but what exactly that entails and what the impacts will be on patients, the insured, insurers and providers is anyone’s guess right now. The pipelines may get built, but when is also uncertain as court cases will undoubtedly be filed. And as an aside, you build energy pipelines for energy reasons, not for jobs. The jobs disappear quickly but the pipelines are here to stay, so let’s evaluate the projects accordingly. But what really matters are whatever tax changes are passed, the structure of any Obamacare replacement, what regulations are rescinded and whether trade flows are affected by tariffs (excuse me, border tax) or export subsidies (excuse me, border adjustment tax). I’ll get the hang of the new PC economic jargon eventually. That is important because as we all know, there is no such thing as a free anything. Some businesses and individuals will gain from the changes while others will lose. Until we know more, the best we can say is that we don’t really know. And I am just not sure when we will know. Meanwhile, the Fed and investors have to operate in this environment of uncertainty. If you believe the business and consumer confidence surveys, there are great expectations about the future. Now it is up to Congress to deliver.

Joel L. Naroff is the president and founder of Naroff Economic Advisors, a strategic economic consulting firm.