October 23, 12

The National Association of Home Builders (NAHB) Paints Rosy Picture

Last Friday the NAHB came out with their September numbers and their forecasts for the next six months. According to NAHB out of the 337 largest metropolitan areas, 188 saw an increase in construction employment 119 saw a decrease,and the rest were stagnant.Also,the housing starts for September were up 1.2 percent over the same time frame last year and the Commerce Department readjusted their figures for August and the new number is 1.1 percent over the same time frame last year.That two month period of time has more housing starts than any two month period going back to October of 10.The mortgage rates have gone up a very small amount in the last 6 months,coupled with the fact that the average price is inching up every month gives the impression that the worst of times are behind us.The consumer price index is also inching up ever so slightly,but it is going up.Most of today,s economists agree that for every two homes that are built it creates one full time job.I think the two is a little on the high side,I think the real number is closer to 1.3 than two,regardless which one is correct the more houses we build the more people that go back to work.

THE EIGHT HUNDRED POUND GORILLA TRIPS ON THE DANCE FLOOR

Remember three weeks ago that I blogged that Caterpillar called a press conference to announce their sales and dollar per share profit, for the year 2015, which was extremely generous,well they announced two days ago that those figures were wrong and they were going to have to ratchet down their sales estimates and their profit per share. At the time I wondered why they were making a big deal over their estimates for the next three years, I had assumed that Caterpillar had made their announcements within a week of China making their announcement that over the next decade they were going to spend close to a trillion dollars upgrading,repairing,fixing and building their interstate system,railroad bridges,runways and airports and sea ports. This was the largest construction project ever announced and I assumed that Caterpillar was counting on getting a huge chunk of those projects.Also at the time they announced that their was going to be a three percent price hike across the board starting the first of the year,making those announcements at the same time was nice timing,what has changed in the last three weeks, it is not like they made a mistake adding up the numbers.The announcement that the revenue and profitability figures were off by 10 or 11 percent was not front page news like price hike announcement,Oh well Komat"su announced last week that they were lowering their revenue and expenses estimates for 2015 too..

Caterpillar announced last week that they are going into a partnership with Illinois Valley Community College and MAG>IAS (worlds largest tool manufacturer) to teach a class that will meet Caterpillars needs for employees,the press release was a little scant on the details but from what I gathered is the class is going to be tailored so when a person completes the program they will be familiar with Caterpillars equipment.It did not mention if their was going to be a heavy equipment school or a heavy equipment training program, and I dont know exactly what their definition is regarding tools, also I do not know if these people are going to be students or employees or a combination of both.

According to some economists today Caterpillars sales and profitability is an accurate reflection of the worlds economy.According to Caterpillar they have had 28 quarters in a row with an increase in revenue.I can remember when I was 12 or 14 years old their was a quip going around that if General Motors caught the flu the rest of the economy sneezed.General Motors went B.K. four years ago and stiffed their stock holders,bond holders and vendors out of at least 75 billion dollars,that,s billion with a B.

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