Vega, thanks. It's possible the NY Times calculated the seasonally adjusted annual rate (SAAR) for the first half - and then mistakenly thought that was the total for the first half.
The Merrill Lynch SAAR estimate was over $500 Billion for the first half of 2006 ... so that would be close. Note that I don't seasonally adjust my estimate. Also Merrill Lynch shows the 2006 rate below 2005.
Those two facts (SAAR instead of actual, and declining from 2005) would significantly alter the NY Times story.
Well I would say that you were probably correct in all years and that if NYT was incorrect on say 2004, they were wildly mistaken on the 2006 datum.
CR, in a case like this, do you notify them first, or do you think they don't know who you are?
I would be surprised if they don't know who you are actually.
Ah, for inducing that incomparable sense of satisfaction and illumination of the newly risen world, there's nothing like a cool, crisp early November morning with a warm bathrobe, a full pot of steaming coffee, the business section of the New York Times, and a chunk of crystal meth to make the math work out.
Unfortunately, I don't have the meth and I've now got steaming coffee all over the bathrobe.
Thank heavens we don't hang out on that vulgar blogosphere thing where unpaid losers without professional editors can just publish any old poorly understood number the Google produces without having to take the consequences. Think how uninformed we'd be if we did that.
calmo, I sent the NY Times an email when I first saw this story. I haven't heard back from them, but I think they should correct this story.
My estimates are "rough"; mostly because it's hard to figure out household investment each quarter with the limited data available. Maybe I'll figure out a better method.
So I'm not surprised my numbers differ somewhat from other estimates. I don't think that is a big deal.
But I believe the 2006 numbers are being used incorrectly. I suspect they are using the SAAR as the actual for the first half.
Usually Q1 is the weakest quarter for MEW, so if I seasonally adjusted my numbers - and then annualized them - I might get something like $450 Billion or so for 2006. And that would be close to their estimate (if it was for the entire year).
However, I'm surprised any method would show 2006 being higher than 2005 - I'm pretty sure MEW is running at a lower rate this year.
I'll post any response I receive.
Tanta, you are a wizard with words. I'm so happy you comment here.
Why thanks, CR. I have always believed that writing well is the best revenge. (Apparently the Times takes a contrarian view.)
I'm sure you're right about the NYT using annualized figures. I sacrificed a few seconds of my life to check the HE gross balances from FOF L.218, and the increase for the first two quarters of 06 is 67.3 billion. The NYT's 126 billion would fit as some sort of annualization of that, rounded to the nearest solecism.
This long - sorry [note: Haloscan says too many links embedded, so will break into two or three comments]
It appears NYT did make a very simple annualization mistake, due to sloppy work - as at least one other source reported on the same Greenspan/Kennedy material and got it right (per CR's figures), while another got it wrong.
NYT says (in CR's linked article, so no new link): Since January 1999, according to figures compiled by Alan Greenspan, the former Federal Reserve chairman, and James Kennedy, a Fed staff economist, in a Federal Reserve Board paper, more than $2.62 trillion has been extracted by homeowners through refinancing and home equity loans.
But as rates have gone up, the extraction has continued. In the first six months of this year, even with interest rates rising, more than $511 billion was extracted from homes through cash-out refinancing and home equity loans, and that was more than the amount taken out for all of 2005, a record year for mortgage equity extraction
Data developed by former Federal Reserve Chairman Alan Greenspan and Fed economist James Kennedy suggest consumers "extracted" cash from their homes such as through cash-out refinancings or home-equity loans at an annual rate of $497 billion in the second quarter. That was down sharply from a peak of $871 billion in the third quarter of 2005.[emphasis added]
According to data compiled by former Federal Reserve Chairman Alan Greenspan and Fed economist James Kennedy, in the second quarter, consumers have extracted only $497 billion from their homes. Thats well off the peak of $871 billion in the third quarter of 2005.[emphasis added]
I am sure the Times would run a correction if someone could write an intelligent and cogent explanation (or find the current 2006 version of the Greenspan/Kennedy piece).
(Note: The Fed has Kennedy listed on their research staff page but unlike most, he has no link to a bio page....
The 11/04/06 Stamford Times date is dynamic, not the date of publication. More importanly, the article first ran in the WSJ on Oct 2, page A1. Here's the link for anyone who is a WSJ sub - I'm not, so I can't get it.
CR, great post! Thanks for setting the record straight. --Bill
Vega, thanks. It's possible the NY Times calculated the seasonally adjusted annual rate (SAAR) for the first half - and then mistakenly thought that was the total for the first half.
The Merrill Lynch SAAR estimate was over $500 Billion for the first half of 2006 ... so that would be close. Note that I don't seasonally adjust my estimate. Also Merrill Lynch shows the 2006 rate below 2005.
Those two facts (SAAR instead of actual, and declining from 2005) would significantly alter the NY Times story.
Best Wishes.
Well I would say that you were probably correct in all years and that if NYT was incorrect on say 2004, they were wildly mistaken on the 2006 datum.
CR, in a case like this, do you notify them first, or do you think they don't know who you are?
I would be surprised if they don't know who you are actually.
They really managed to scramble that story. Hopefully, no one loses their job over it.
Ah, for inducing that incomparable sense of satisfaction and illumination of the newly risen world, there's nothing like a cool, crisp early November morning with a warm bathrobe, a full pot of steaming coffee, the business section of the New York Times, and a chunk of crystal meth to make the math work out.
Unfortunately, I don't have the meth and I've now got steaming coffee all over the bathrobe.
Thank heavens we don't hang out on that vulgar blogosphere thing where unpaid losers without professional editors can just publish any old poorly understood number the Google produces without having to take the consequences. Think how uninformed we'd be if we did that.
"They really managed to scramble that story. Hopefully, no one loses their job over it."
(chuckling softly)
Why on earth would you hope that?
You must not read DeLong...
calmo, I sent the NY Times an email when I first saw this story. I haven't heard back from them, but I think they should correct this story.
My estimates are "rough"; mostly because it's hard to figure out household investment each quarter with the limited data available. Maybe I'll figure out a better method.
So I'm not surprised my numbers differ somewhat from other estimates. I don't think that is a big deal.
But I believe the 2006 numbers are being used incorrectly. I suspect they are using the SAAR as the actual for the first half.
Usually Q1 is the weakest quarter for MEW, so if I seasonally adjusted my numbers - and then annualized them - I might get something like $450 Billion or so for 2006. And that would be close to their estimate (if it was for the entire year).
However, I'm surprised any method would show 2006 being higher than 2005 - I'm pretty sure MEW is running at a lower rate this year.
I'll post any response I receive.
Tanta, you are a wizard with words. I'm so happy you comment here.
Best Wishes.
Why thanks, CR. I have always believed that writing well is the best revenge. (Apparently the Times takes a contrarian view.)
I'm sure you're right about the NYT using annualized figures. I sacrificed a few seconds of my life to check the HE gross balances from FOF L.218, and the increase for the first two quarters of 06 is 67.3 billion. The NYT's 126 billion would fit as some sort of annualization of that, rounded to the nearest solecism.
This long - sorry [note: Haloscan says too many links embedded, so will break into two or three comments]
It appears NYT did make a very simple annualization mistake, due to sloppy work - as at least one other source reported on the same Greenspan/Kennedy material and got it right (per CR's figures), while another got it wrong.
NYT says (in CR's linked article, so no new link): Since January 1999, according to figures compiled by Alan Greenspan, the former Federal Reserve chairman, and James Kennedy, a Fed staff economist, in a Federal Reserve Board paper, more than $2.62 trillion has been extracted by homeowners through refinancing and home equity loans.
But as rates have gone up, the extraction has continued. In the first six months of this year, even with interest rates rising, more than $511 billion was extracted from homes through cash-out refinancing and home equity loans, and that was more than the amount taken out for all of 2005, a record year for mortgage equity extraction
The Fed has a (sorry, pdf) paper by Greenspan and Kennedy, but it's from last year, so no 2006 figures there.
Hmm - following the story further, the Stamford Times has a story from the WSJ wire dated yesterday (11/04/06), by Christopher Conkey with Greg Ip which says:
Data developed by former Federal Reserve Chairman Alan Greenspan and Fed economist James Kennedy suggest consumers "extracted" cash from their homes such as through cash-out refinancings or home-equity loans at an annual rate of $497 billion in the second quarter. That was down sharply from a peak of $871 billion in the third quarter of 2005.[emphasis added]
[more to follow in next comment]
[here's the rest]
While Tony Paradiso has a column in the Nashua Telegraph (NH) that makes the same mistake NYT made:
According to data compiled by former Federal Reserve Chairman Alan Greenspan and Fed economist James Kennedy, in the second quarter, consumers have extracted only $497 billion from their homes. Thats well off the peak of $871 billion in the third quarter of 2005.[emphasis added]
I am sure the Times would run a correction if someone could write an intelligent and cogent explanation (or find the current 2006 version of the Greenspan/Kennedy piece).
(Note: The Fed has Kennedy listed on their research staff page but unlike most, he has no link to a bio page....
Later update
The 11/04/06 Stamford Times date is dynamic, not the date of publication. More importanly, the article first ran in the WSJ on Oct 2, page A1. Here's the link for anyone who is a WSJ sub - I'm not, so I can't get it.