In a sign that global warming is a reality, a new study reveals that ice shelves in western Antarctica are melting at a faster pace than previously known.

Melting of ice by ocean currents can take place when air temperature remains cold, maintaining a steady process of ice loss — and ultimately a rise in the sea level.  “We can lose an awful lot of ice to the sea without ever having summers warm enough to make the snow on top of the glaciers melt,” said Hamish Pritchard of the British Antarctic Survey and the study’s lead author.  “The oceans can do all the work from below.”  The study also found a shift in Antarctica’s winds as a result of climate change.  “This has affected the strength and direction of ocean currents,” Pritchard said.  “As a result warm water is funneled beneath the floating ice.  These studies and our new results suggest Antarctica’s glaciers are responding rapidly to a changing climate.  We’ve looked all around the Antarctic coast and we see a clear pattern: in all the cases where ice shelves are being melted by the ocean, the inland glaciers are speeding up.  It’s this glacier acceleration that’s responsible for most of the increase in ice loss from the continent and this is contributing to sea-level rise.”

Antarctica contains adequate ice to raise sea levels by approximately 187 feet, although it’s unlikely to melt for thousands of years, according to the United Nations.  Some ice shelves are thinning by a few meters a year, and glaciers in response are draining billions of tons of ice into the sea, Pritchard said.  “Most profound contemporary changes to the ice sheets and their contribution to sea level rise can be attributed to ocean thermal forcing that is sustained over decades and may already have triggered a period of unstable glacier retreat.”

Some ice shelves are thinning just a few feet a year, and glaciers drain billions of tons of ice into the sea as a result.  “This supports the idea that ice shelves are important in slowing down the glaciers that feed them, controlling the loss of ice from the Antarctic ice sheet,” Pritchard said.

While conducting the study, the researchers measured how ice shelf height changed, using computer models to check changes in ice thickness due to natural snow accumulation.  Additionally, they used a tide model that eliminated height changes due to rising tides.  “This study shows very clearly why the Antarctic ice sheet is currently losing ice, which is a major advance,” said Professor David Vaughan, the leader of ice2sea.  The study is significant because it shows the key to predicting how an ice sheet might change in the future.  “Perhaps we should not only be looking to the skies above Antarctica, but also into the surrounding oceans,” Vaughan added.

Tom Wagner, cryosphere program scientist at NASA, said that the study demonstrates how “space-based, laser altimetry” can expand scientists understand of the earth.  “Coupled with NASA’s portfolio of other ice sheet research using data from our GRACE mission, satellite radars and aircraft, we get a comprehensive view of ice sheet change that improves estimates of sea level rise.”

“When ice shelves completely collapse — and we’ve seen that before — the grounded glaciers behind them will speed up; we know that,” said co-author Helen Amanda Fricker of Scripps Institution of Oceanography at the University of California San Diego.  “But what this study is showing, which is very new, is that you don’t need to lose the shelf entirely for this to happen; just a reduction in the thickness of the ice shelf is enough to allow more of the grounded ice behind it to flow off the continent.”

The American economy grew less than expected during the 1^st quarter

In addition to the improvement in consumer purchases and home building, the economy benefited from a rise in auto production.  The GDP was negatively impacted by a drop in government spending and slower growth in business investment.  The United States is faring better than some other major economies.  The United Kingdom is in the throes of its first double-dip recession since the 1970s.  In Japan and Germany, GDP declined in the final three months of 2011, while China’s economy, the world’s second-largest, is also cooling.

“Consumers are remarkably stable and steady,” said Julia Coronado, chief economist for North America at BNP Paribas in New York.  “We’ll need to see final demand continue to improve.  We’re still in muddling-along territory.”

According to MarketWatch, the devil is in the details. “Growth of 2.2 percent is mediocre, but it’s worse than that once you peel away a few layers — about a fourth of the growth in gross domestic product was accounted for by a build-up in inventories, and half of it came from the building and selling of motor vehicles.  Strip away the inventory growth, and final sales in the economy increased 1.6 percent, the 4^th quarter in the past five that was below two percent.  Although all the headlines report on the GDP numbers, the number to watch is final sales, because that gauges demand for our products, not merely how much we made.  Away from King Consumer, the rest of the economy is slowing.  Business investment spending dropped 2.1 percent, the first decline since 2009.  Let’s not get carried away too much by the gloom and doom.  The economy IS growing, even if it’s not as fast as we’d like.  The economy has grown by nearly seven percent since depths of the recession in 2009.”

As disappointing as the 2.2 percent is, the market will have to learn to live with lowered expectations.  From a market perspective, lukewarm growth could force Ben Bernanke’s hand to unfreeze lending, keep interest rates at their current lows, or re-use other monetary policy tools to keep money flowing.  Ironically, even with the Fed’s relaxed monetary policy, most of the extra cash in the economy remains on corporate balance sheets (Apple has billions on hand) or is going into the securities markets.

Official reaction was as expected. “Today’s advance estimate indicates that the economy posted its 11^th straight quarter of positive growth, as real GDP (the total amount of goods and services produced in the country) grew at a 2.2 percent annual rate in the first quarter of this year.  While the continued expansion of the economy is encouraging, additional growth is needed to replace the jobs lost in the deep recession that began at the end of 2007,” said Alan Krueger, chairman of the White House’s Council of Economic Advisers.

Fed chairman Ben Bernanke called the slow pace of recovery “frustrating. Here we are almost three years from the beginning of the expansion, and the unemployment rate is still over eight percent.  It’s been a very long slog.  And that, I think, would be the single most concerning thing,” he said.

The S&P/Case-Shiller home price index of 20 cities revealed a 3.5 percent decline

The primary challenge continues to be foreclosures and other distressed property sales, according to Pat Newport, an analyst for IHS Global Insight.  “We still have six million homeowners who are late on their payments,” he said.  “We’ll still have lots of foreclosures, which will depress prices.”  The good news is that some of the worst hit of the index’s 20 cities appear to be on the mend.

“Some (cities) which have declined considerably over the last five to six years now have begun to exhibit an uptick in home prices,” said Luis Vergara, a director with Mission Capital Advisors.  Phoenix prices climbed 3.3 percent year-over-year.  Miami recorded a gain of 0.8 percent over 2011.  Even Las Vegas appears to be turning more positive, with home prices down only 8.5 percent, compared with a drop of nine percent in January.

The weakening may be due to the typical pattern of minimal interest during winter and greater interest in housing during the spring and summer. According to S&P, the unadjusted series is a more reliable indicator.  House prices have fallen by more than one-third from their peak when the bubble burst.  The glut of distressed properties on the market have slowed the market, as has the unemployment rate and tough credit conditions, which have offset the benefit of mortgage rates near or at record lows.

“The broad prospect for home prices is at best flat over the course of the year,” said Tom Porcelli, chief economist at RBC Capital Markets.  “And as much as we have had progress with the supply and demand imbalance, it is still a challenge to gather any momentum here.”

According to the Commerce Department, March home sales fell 7.1 percent to a seasonally adjusted 328,000-unit annual rate.  February’s sales pace was revised higher to 353,000 units, the best showing since November of 2009, from the previously reported 313,000 units.  “The conditions in housing are still extremely weak, but there are some very subtle, less negative, signs suggesting stabilization there,” said Sean Incremona, economist at 4Cast Ltd.

Stabilizing home values are necessary for a sustained rebound in the housing industry by giving prospective buyers confidence. Near record-low borrowing costs and additional hiring may help the market absorb foreclosures, which may mean housing will no longer hinder economic growth.  “Mortgage rates are very, very low, but you really need to see strong job growth,” said Scott Brown, chief economist at Raymond James & Associates, Inc.  “It’s still a very long way to go before we get a full recovery.”

The latest reports indicate that homebuilders are still trying to get back on their feet.  The National Association of Home Builders/Wells Fargo sentiment index in April declined to a three-month low.  This measure of anticipated sales for the next six months was not good news.  Sales of existing houses fell in March for the third time in the last four months.  Home purchases fell 2.6 percent to a 4.48 million annual rate from 4.6 million in February, according to the National Association of Realtors.  The average rate on a 30-year fixed-rate mortgage hit an all-time low of 3.87 percent in February and was little changed at 3.90 percent in the week ended April 19, according to Freddie Mac.

Writing for the Index Universe website, Cinthia Murphy says that “A number of encouraging economic indicators such as an improving job market and slowly growing demand for homes loom as factors that some hope should start to help underpin housing values, even if consumer confidence remains low for now.  A clear recovery in housing is deemed crucial for a full-fledged economic recovery in the U.S. after the credit crisis of 2008 sent housing as well as the financial markets sharply lower.  U.S. housing was at the center of that crisis, and much of the developed world remains mired in slow, debt-constrained, growth.

Michael Feder, CEO of Radar Logic, a real estate data and analytics firm, thinks Case-Shiller is underselling the momentum in the housing recovery. Radar Logic’s 25-city index, which tracks daily activity, is expected to show a month-over-month increase of nearly two percent during February, Feder said.  The difference frequently comes when the market is turning, though Feder acknowledges that the mild winter may have created some demand.  Another thing to look at is investment buyers coming into the market, which Feder believes could create something of a “mini-bubble” in prices given their willingness to pay premiums.  News of that willingness spreads pretty quickly.  While it can draw in some fence-sitters who have been waiting for a bottom, there is little evidence of that to date, Feder said.

Much of Golden’s research came from studying athletes who had fallen off their game.  Jim Loehr and Tony Schwartz, authors of the book “Power of Full Engagement”, were coaches who worked with world-class athletes who were no longer at peak performance.  Loehr and Schwartz observed the athletes to determine where they had gone wrong and how they could help them return to peak performance.  In the process, Loehr and Schwartz discovered that some of these concepts also applied to corporate athletes.  By concentrating on returning to high energy levels and getting a sense of meaning and significance in their lives, corporate athletes can once again deliver consistent peak performance.

Golden also addresses effective work habits.  In terms of multi-tasking, research suggests that it is not very effective – whether the individual is 25 or 75.  According to Golden, people can successfully perform two tasks at once if they are different from each other.  People are far more effective when they work on one task for five or 10 minutes and then switch to another for an equal period of time.

They are also slightly delusional.  “Highly effective and happy people are often more optimistic than reason should allow,” she says.  Although a completely rational person knows that the road ahead often is bumpy, the most effective corporate leaders grasp that these things are a part of life and take them as they come.

To listen to Gail Golden’s full interview on achieving peak performance in the workplace, click here.

During the fall, the Miami-based chain started testing delivery at four restaurants in the Washington, D.C., area. The company plans to expand the test to 16 more locations before deciding whether or not to make it a large-scale effort.  Customers can order online or by phone.  Although home delivery is widespread for some fast foods — like pizza — it is much harder to do with burgers and fries can get soggy very quickly, so fast delivery is key.   Jonathan Fitzpatrick, the chain’s chief brand and operations officer, notes that Burger King has developed new packaging technology “which ensures the Whopper is delivered hot and fresh, and the french fries are delivered hot and crispy.”

“There are some real food-quality issues here,” said Ron Paul,  president of the research firm Technomic. “But there’s no question that consumer expectation for having things delivered has risen.”  In some markets, Amazon.com delivers books the same day they’re ordered. Groceries are being delivered more often. And retail giants, such as Target, even offered home delivery of fresh-cut Christmas trees.

To promote its home delivery, Burger King has established a dedicated web page that makes it easy for customers in the right area send in their orders.  Delivery is available between 11 a.m. and 10 p.m. and does not include breakfast food (including coffee), milkshakes or fountain drinks. The drivers will “try to deliver” within half an hour.

Writing for MSNBC, Marisa King notes that “Why delivery? Burger King has run a delivery service outside the U.S. for many years and has had great success with it all across the globe including in Mexico, Turkey, Brazil, Columbia and Peru, according to a company spokesman.” But another reason for Burger King’s foray into delivery service could be that it’s about to be unseated by Wendy’s as America’s No. 2 burger chain (behind No. 1 McDonald’s) for the first time since Wendy’s was founded in 1969.

According to Burger King, it will use “new delivery packaging technology, in conjunction with thermal bags,” that will keep deliveries fresh. In a major metropolitan area like New York City, delivery service from big box retailers down to the local corner bodega is all but expected.  Hundreds of restaurants have signed on to Web delivery services such as Seamless and GrubHub as a hassle-free way to transport food to customers’ doors. Grocery delivery sites such as Fresh Direct and MaxDelivery.com have thrived in the Big Apple as a convenience for busy shoppers who want to avoid crowds.

Carmen Lobello of Death and Taxes magazine, takes a more negative note.  “While totally unnecessary, given that pizza home delivery has been standard for years it’s almost a wonder it’s taken so long for burger joints to catch on. Though not quite. One of the main problems with Burger King’s food — other than taste and ingredients — is that there’s a huge difference between a fresh fast food burger and fries and one that’s been hanging out in a bag for thirty minutes. The moment the temperature of a BK meal passes from hot to room temperature, it transforms from food into garbage.”

Domino’s, whose business is 70 percent delivery, is watching  with a smile. “We wish them luck,” spokesman Tim McIntyre says. “There is a reason that not all pizza places deliver: It isn’t easy.”

Two young New York entrepreneurs

Mandel established CompStak because “commercial real estate information should be available and transparent, and because most commercial real estate technology is from the Flinstones era.”

In theory, when leases are signed, tenants, landlords and brokers sign non-disclosure agreements in which they say they will not disclose lease terms, like rents, landlord concessions and escalation clauses.  In reality, brokers regularly share “comps” as a professional courtesy so they have knowledge of market rates for buildings and neighborhoods.

What Mandel and Belobrovka are doing is gathering as many of these “comps” as they can and offering brokers and real-estate professionals access to their data base in exchange for information.  The system currently is being tested and is expected to be launched in the summer.  Mandel and Belobrovka hope that landlords, tenants, private equity firms, hedge funds and others will pay “five to six figures” for access.  “The reality is that everyone has been exchanging this information,” according to Mandel.

The men face several obstacles, as they work on an extremely tight budget and attempt to attract investors.  CompStak also might face strong opposition from brokerage firms who could perceive the service as a competitive challenge to their dominance of market information.  These firms might not allow employees to contribute to CompStak.  CBRE Group Inc said that the firm does not “share comps with any other outside organizations, ever.”

The quality of CompStak’s data is critical.  Mandel and Belobrovka say their data base currently includes 2,900 comps for deals closed in the last two years and a total of 6,000 comps.  Industry estimates are that about 2,500 Manhattan leasing deals are done a year.  If those numbers are correct, CompStak has collected approximately half of all comps for the last several years.  CompStak executives say they haven’t met resistance from the brokerage industry yet and don’t expect any, noting that brokerage firms offer a lot more than quality information.  “If you think that (lease comps are) your only advantage, you’re probably not a very good broker,” according to Mandel.

Writing for the A Student of the Real Estate Game website, Joe Stampone says that “Throughout my brief career in commercial real estate, I’ve seen a lot of innovation. From 3D mapping, mobile, and retail tech, to the data space, tech-related start-ups are proliferating.  I was lucky enough to be part of a test group for CompStak, a new crowd-sourced database of lease comparables launching in New York City.  CompStak is destined to be a game-changer and one of the founders was nice enough to take the time to sit down and answer a few questions.”

Mandel describes CompStak this way: “The germ of the idea for CompStak, and our first product, is a marketplace for the exchange of lease deal information (comps).  Others have certainly identified this need, and a few have acted on it, but many others never tried, because unlike collecting sales data and other property information there are no large sources for this information.  We realized very early on, that if we didn’t tackle this problem the right way, we could not succeed.  We had to create a site that is very easy to use, allow our users to add and search for a lot of data, and properly incentivize brokers and appraisers to share information that is near and dear to them.  Our lease comp marketplace is just the first step in our larger vision.  Our ultimate goal is to increase transparency in commercial real estate information on the whole.  This includes the information that buyers, sellers, tenants, landlords and brokers use in doing transactions, and the information owners use to manage their buildings and maximize their revenue.”

Mandel is bullish on the future of CompStak. “When all the stats get tallied, 2011 may surpass the record number of square feet of office space transacted in NYC.  With the instability in the national economy combined with the turmoil in European countries, I think it will be tough for 2012 to compete.  The segment of NYC real estate that I’m most interested in, is office space for tech startups.  Tech startup real estate has been one of the strongest drivers of NYC office space in the past year, and I think it will continue to make a big impact in 2012.  Availability of office space in Midtown South (where most tech startups are located — roughly between Canal and 34th Street — is lower than Downtown and Midtown, and is the lowest it’s been in three years.  Finding cool creative loft space for startups is really tough right now, and the smaller the space you need, the harder it is to come by.”

Ten of the 15 richest counties in the United States are located in Washington, D.C.’s Virginia and Maryland suburbs.

Loudoun County, VA, with a median household income of $119,540, takes first place. With a median household income that is $16,000 higher than second-place Fairfax County, VA, Loudoun has trounced the competition on its way to becoming the richest county in America.  Loudoun borders both West Virginia and Maryland and is the site of Washington Dulles International Airport.  The Appalachian Trail runs along its western border, and the area was principally agricultural until the airport was built in the 1960s.  The population has continued to increase since then, with the area nearly doubling between 2000 to 2010. The poverty level is just 3.2 percent.

As of the 2010 Census, Loudoun County is estimated to be home to 312,311 people, an 84 percent increase over the 2000 figure of 169,599.  That increase makes Loudoun the fourth fastest-growing county in the United States.  Loudoun County is home to world headquarters for several high tech companies, including Verizon Business, Telos Corporation, Orbital Sciences Corporation, and Paxfire.  Like Fairfax County’s Dulles Corridor, Loudoun has economically benefited from the existence of the airport, which is mostly located in the county.  Western Loudoun County retains a strong rural economy and the equine industry has an estimated revenues of $78 million.

Second place Fairfax County, VA, is one of the largest counties in terms of population (1,081,726 residents in 2010), but it is also notable for its high-priced real estate.  Fairfax is one of only two counties to break the half-million mark in home values, with the median value of $507,800 for an owner-occupied home.

In descending order, the next richest counties in the Washington, D.C., area are Howard County, MD, with $101,771; Arlington County, VA, with $94,986; Stafford County, VA, with $94,317; Prince William County, VA, with $92,655; Montgomery County, MD, with $89,155; Calvert County, MD, with $88,862; St. Mary’s County, MD, with $88,444; and Charles County, MD, with $87,007.

Eugene Lauer, Charles County’s Economic Development Director, said he is not surprised that southern Maryland counties made the list.  “I think it’s great.  A lot of people may not know this, but we have ranked fairly high for a number of years,” he said.  “We know we have an affluent, highly-educated, qualified workforce in Charles County, and we have excellent students who will be in the workforce of tomorrow,” according to Charles County Commissioner Candace Quinn Kelly.  Lauer said Charles County’s low unemployment rate also helps drive up its ranking.  “Our unemployment rate is 5.4 percent.  That’s fourth or fifth best in the state, better than Maryland as a whole, which is 6.7 percent, and the U.S., which is 8.5 percent,” he said.

Dean Frutiger of the Council for Community and Economic Research though has a serious caveat.  “To rank something based on simply income does not take into account real cost of living issues,” said Frutiger, who calculates the nationwide Cost of Living Index.  After you factor in the local costs for items like housing, utilities, groceries, and transportation – D.C. metro area incomes go down by about 43 percent.  According to Frutiger “That $119,000 a year median income in Loudoun County, reduced by the cost of living index, means you’re down to $83,000.”

After rising steadily for four months, gas prices at last seem to be stabilizing.

“It’s nice, much more manageable,” said Mark Timko, who paid less than $4 per gallon recently in Burr Ridge, IL, a Chicago suburb, for the first time since March.  “I wasn’t sure how high they were going to go this year.”

Gas prices are lower than they were a year ago in 11 states, according to the Oil Price Information Service.  At $3.88, the national average is still costly, but it’s less than the peak of $3.94.  Predictions of $5 gasoline have  – thankfully evaporated.

Tom Kloza, publisher and chief oil analyst at Oil Price Information Service, believes that gas prices will drop to a national average of just above $3.80 soon.  Stuart Hoffman, chief economist at PNC Financial Services Group, said declining prices will put more money into the economy that Americans can spend on other things.  A 10-cent drop in gas prices means drivers have an extra $37 million per day.

Stabilizing crude-oil prices and “sufficient supplies” of gas have led to the price decline, Trilby Lundberg, president of Lundberg Survey, Inc., said.  The drop was the first in Lundberg’s twice-monthly surveys since December. The costliest gas in the lower 48 states was in Chicago, where the average was $4.26 a gallon, Lundberg said.  The cheapest price was in Tulsa, where customers paid an average of $3.52 a gallon.  “We can thank crude oil for allowing gasoline to do what it has been wanting to do for weeks, which is drop,” Lundberg noted.

The price of gas is becoming an issue in the 2012 presidential election.  President Barack Obama urged Congress to boost federal supervision of oil markets, including larger penalties for market manipulation and greater power for regulators to increase the amount of money traders must put up to back their energy bets.  “We can’t afford a situation where some speculators can reap millions, while millions of American families get the short end of the stick,” Obama said.  Mitt Romney, the likely Republican nominee, has accused the Obama administration of disrupting domestic oil production with regulations.

The Energy Information Administration weekly report noted that the nation’s crude oil stocks rose for the fourth straight week by 3.9 million barrels to 369.0 million barrels, better than anticipated.  Gas stocks fell by 3.7 million barrels to 214.0 million barrels.  Demand for gas saw a relatively small retraction of 103,000 barrels per day (bpd) to 8.681 million bpd.  Demand in the same week in 2011 was 500,000 bpd higher.  The four-week demand average for gas is still falling somewhat and currently stands at four percent.  Gas demand of 8.775-million bpd represents a 94,000 bpd increase, but reflects a 288,000-bpd drop from the same week last year.  The four-week moving average shows gas demand destruction of 2.8 percent; and the year-to-date numbers imply about 5.9 percent lower consumption.  Analysts can split hairs about actual motor fuel demand, but it is clearly lower than last year,

“April has seen more days of gas price declines than any month this year, which has motorists and analysts alike wondering if a gas price break is under way,” said Martha M. Meade, Manager of Public and Government Affairs for AAA Mid-Atlantic.  “While several factors influencing crude oil prices remain in play, some analysts believe gas prices will continue to retreat and sometime in the next ten days or so we could be paying less at the pump than we were a year ago.”

Americans may be mending their gas-guzzling ways, according to the Washington Post. According to Steven Mufson, “As prices have neared and in some cases topped $4 a gallon, drivers have cut their consumption of gasoline to its lowest levels in a decade, driving less and buying cars that are more fuel-efficient.  The adjustment has slowed the climb in gasoline prices, which until last week had risen for 10 consecutive weeks, and could preserve some money for Americans to spend on other items as the economy struggles to recover more convincingly.  In the Washington area, there has been an increase in applications for carpooling under the Commuter Connections program, which links people seeking to share rides. Applications rose 20 percent last year and 10 percent in January and February, in each case closely tracking the increase in gasoline prices, according to Ronald Kirby, director of the department of transportation planning for the Metropolitan Washington Council of Governments.  The response to $4 gasoline is reinforcing a trend toward lower fuel consumption.  This will be the third year in the past five with historically high oil prices. Even before the latest price spike, gasoline consumption had dropped six percent from 2007 through 2011, the Energy Information Association (EIA) said.  The Federal Highway Administration adds that the number of vehicle miles driven over a 12-month period ending January was lower than in any year since 2004.”

Gasoline purchases totaled four percent of total consumer spending in 2011, noted Mark Zandi, chief economist of Moody’s Analytics.  That’s more than the 2.3 percent recorded when crude oil prices crashed in 1998, and significantly less than the six percent level in 1981 when an oil price shock shook the economy.  “I’ve been surprised, at least so far, that $4 a gallon hasn’t done more damage,” Zandi said.  “So far, it doesn’t seem to have done any.”  According to Zandi, the improving job market is one reason.  Another is that the warm winter reduced people’s heating bills and evened out total household energy costs.

Europe’s financial woes have spread across the English Channel as the United Kingdom slid into its first double-dip recession since the 1970s.

As anti-austerity backlash grows on the Continent, Prime Minister David Cameron said the data was “disappointing” and promised to shore up growth without backtracking on the UK’s biggest fiscal squeeze since World War II.  “I don’t seek to excuse them, I don’t seek to try to explain them away,” Cameron said.  “There is no complacency at all in this government in dealing with what is a very tough situation, which frankly has just got tougher.”  Cameron said “We have got to rebalance our economy.  We need a bigger private sector.  We need more exports, more investment.  This is painstaking, difficult work but we will stick to our plans, stick with low interest rates and do everything we can to boost growth, competitiveness and jobs in our country.”

Opposition leader Ed Miliband said the figures are “catastrophic” and asked Cameron why this had happened.  “This is a recession made by him and the chancellor in Downing Street.  It is his catastrophic economic policy that has landed us back in recession,” Miliband said.

The Bank of England is in the last month of economic stimulus and the fall-off in output comes as prospects dim in the Eurozone, Britain’s biggest export market.  “This isn’t supportive of the fiscal consolidation program, so the government is likely to be concerned about that,” said Philip Rush, an economist at Nomura International in London.  “The data were bad, and that supports the view that the Bank of England will do a final £25 billion of quantitative easing in May.”

According to ONS, output in the production industries decreased by 0.4 percent; construction fell by three percent.  Output of the services sector, which includes retail, increased by 0.1 percent.  The decline in government spending contributed to the particularly large fall in the construction sector.  “The huge cuts to public spending – 25 percent in public sector housing and 24 percent in public non-housing and further 10 percent cuts to both anticipated for 2013 — have left a hole too big for other sectors to fill,” said Judy Lowe, deputy chairman of industry body CITB-ConstructionSkills, said.

The UK’s last double-dip recession, defined as consecutive quarterly drops in GDP, was in 1975. At that time, Labour Prime Minister Harold Wilson was in office and Margaret Thatcher was elected leader of the opposition Conservatives.  UK Treasury forecasters and the International Monetary Fund (IMF) believe the economy will grow 0.8 percent this year, the same as last year.  According to Chancellor of the Exchequer George Osborne, the UK’s economic situation is “very tough” and the government should stick to its plans of eliminating a majority of the deficit by 2017.  “The one thing that would make the situation even worse would be to abandon our credible plan and deliberately add more borrowing and even more debt.  It’s taking longer than anyone hoped to recover from the biggest debt crisis of our lifetime,” Osborne said. “The one thing that would make the situation even worse would be to abandon our credible plan and deliberately add more borrowing and even more debt.”

Chris Williamson, chief economist at Markit, said: “The underlying strength of the economy is probably much more robust than these data suggest.  The danger is that these gloomy data deliver a fatal blow to the fragile revival of consumer and business confidence seen so far this year, harming the recovery and even sending the country back into a real recession.”

Not everyone agrees that the data indicates a double-dip recession.  Writing in the Telegraph, Philip Aldrick says that “Economists have been questioning the reliability of the ONS numbers for a while now, but the latest data drew the debate sharply into focus.  At -0.2 percent, the GDP reading was considerably worse than the consensus of 0.1 percent growth.  The ‘discrepancy’, as Goldman Sachs’ Kevin Daly described it, was ‘unbelievable’ because much of the recent survey data – from the Bank of England’s agents’ reports to the purchasing managers’ indices – have been encouraging.  Andrew Goodwin of the Ernst & Young ITEM Club agreed.  ‘Our reaction is one of disbelief,’ he said.  ‘The divergence is virtually unprecedented and must raise significant question marks over the quality of the data.’  They are not alone.  No lesser institution than the Bank of England has queried the ONS data.  Last week, minutes to the Monetary Policy Committee meeting damningly noted: ‘The sharp falls in construction output in December and January were perplexing, and the Committee was minded not to place much weight on them.”

American homebuilders started construction on new houses in March at a slower pace,

The increase in permits suggests builders are increasingly optimistic as the industry recovers from the worst slump in modern times. Multi-family permits rose 24.2 percent to 262,000.  On the other hand, permits for single-family homes fell 3.5 percent to 462,000 — evidence that builders still face pressure from a deluge of foreclosures.  Many buyers are looking for deals on existing homes instead of paying more for new construction.

Some economists speculate that warm weather contributed to the March decline in housing starts because it allowed builders to start new projects in January and February that they normally would have begun in spring.  “It appears that the payback from an unusually warm fall and winter came in March as record warm temperatures likely pulled new construction forward,” said Yelena Shulyatyeva of BNP Paribas.

The average March temperature was 51.1 degrees; that’s 38.6 degrees warmer than the 20^th century average and the hottest March since records were first kept in 1895, according to the National Oceanic Atmospheric Administration.  Spring home sales are expected to outpace last year as record low mortgage rates produce an attractive market for home buyers.  The average fixed rate on a 30-year mortgage was 3.88 percent in mid-April, according to Freddie Mac and may fall again.

An oversupply of unsold homes is holding prices down, creating a major difficulty for the sector, said Gregory Miller, an economist at Suntrust Banks in Atlanta.  “The production side of the housing market is in the early stages of recovery, but builders are shifting their composition of products from condos and single-family homes to apartment construction.  It’s going to be rocky for awhile.  You still have inventory overhang.  There are also issues on the financing side of production as well as the mortgage side.  The problem is getting over the financing hurdle. Lenders are still very concerned about where they put their capital.  From a trend perspective, it is still on a rising path.  Tentative is the best we could say about this.”

Even a slow-growing housing market is a big plus because it is no longer a drag on the broader economy. Residential real estate was the cause of the financial crisis and the recession, so it’s encouraging to see this sector moving in the right direction.  It’s early to expect strong, sustained growth in the immediate future.  “Housing continues to bump along the bottom,” said Jacob Oubina, a senior economist at RBC Capital Markets.  “The best we can hope from housing over the next couple years is that it won’t subtract from growth.”

According to Omer Esiner, Chief Market Analyst, Commonwealth Foreign Exchange, “The housing data is mixed.  On the one hand housing starts came in below expectations and on the other hand it was a strong month for permits, which bodes well for the months ahead.  So the rise in permits kind of offsets the disappointing data.”