by Calculated Risk on 10/22/2009 08:30:00 AM

The DOL reports weekly unemployment insurance claims increased to 531,000:

In the week ending Oct. 17, the advance figure for seasonally adjusted initial claims was 531,000, an increase of 11,000 from the previous week's revised figure of 520,000. The 4-week moving average was 532,250, a decrease of 750 from the previous week's revised average of 533,000.
...
The advance number for seasonally adjusted insured unemployment during the week ending Oct. 10 was 5,923,000, a decrease of 98,000 from the preceding week's revised level of 6,021,000.

Click on graph for larger image in new window.

This graph shows the 4-week moving average of weekly claims since 1971.

The four-week average of weekly unemployment claims decreased this week by 750 to 532,250, and is now 126,500 below the peak in April.

Initial weekly claims have peaked for this cycle. The key question is: Will claims continue to decline sharply, like following the recessions in the '70s and '80s, or will claims plateau for some time at an elevated level, as happened during the jobless recoveries in the early '90s and '00s?

The level is still very high suggesting continuing job losses ...

by Calculated Risk on 10/22/2009 12:08:00 AM

From the Mercury News: Santa Clara County apartment rents plunge

Apartment rents plunged 10 percent in Santa Clara County in the third quarter compared with a year earlier, the biggest decline in any metro area in the Western United States ...

From the Las Vegas Sun: LV apartment rental rates decline in third quarter

RealFacts ... said the average asking price for apartments in the Las Vegas area in the quarter was $837, down 2.1 percent from $855 in the second quarter and down 5.7 percent from $887 one year ago.

From Bloomberg: Apartment Rents Decline in U.S. West as Unemployment Increases

Apartment rents declined throughout the U.S. West and South in the third quarter as rising unemployment made it harder for landlords to raise their rates.

The average asking rent fell to $965 from $1,002 a year earlier, said Novato, California-based RealFacts, which surveyed owners of more than 12,600 complexes. The occupancy rate dipped below 92 percent from almost 93 percent a year earlier.
...
In California’s Oxnard-Thousand Oaks-Ventura region, rents fell 7.4 percent to $1,429, and in the Seattle area they dropped 7.3 percent to $1,036.

Falling rents is great for renters, but it means falling apartment values, more losses for lenders and CMBS investors, more pressure on home prices, and possibly a declining CPI (rent is the largest component).

by Calculated Risk on 10/21/2009 08:22:00 PM

From the Financial Times: Top China banker warns on asset bubbles

The Financial Times quotes Qin Xiao, chairman of China Merchants Bank, arguing that "it is urgent" for China to shift to a neutral monetary policy because of asset price increases.

The stimulus package in China is huge:

... China’s stimulus measures could amount to 15-17 per cent of GDP this year if government-induced bank lending is taken into account – by far the largest among major economies.
excerpted with permission

And from the WSJ: China Gains Confidence in Recovery

China's recovery is becoming broader and potentially more sustainable, a shift that could provide better support for a still-fragile global economy. ... Economic data for the third quarter ... are expected to show that gross domestic product grew by around 9% from a year earlier.
...
As the fastest-growing major economy, China has a key role to play in pulling the world out of the deep slump it fell into last year. But its rebound this year has been so quick, and driven by such a huge flood of money from the state-controlled banking system, that many investors have questioned whether the expansion can continue for much longer.

This is a key point for China and the global economy. If China slows down too quickly, the global recovery could stall.

by Calculated Risk on 10/21/2009 05:13:00 PM

Dave Altig writes at Macroblog: The growing case for a jobless recovery

Dr. Altig reviews several recent Macroblog posts, and adds:

The percentage of employee separations labeled permanent is at a recorded high.

Underneath the usual total unemployment numbers are the reasons an individual is unemployed: You are on temporary layoff; you quit your job; you have reentered the labor market and have yet to find a job; or you are entering the job market for the first time and have yet to find a job. Or, finally, you have been permanently separated from your previous employer, who has no expectation of hiring you back.

The last category is the dominant reason for unemployment at this time. That might not seem surprising, but it actually is. Never, in the six recessions preceding the latest one, did permanent separations account for more than 45 percent of the unemployed. The current percentage stands at 56 percent as of September and appears to be still climbing:


Of course, none of this is proof positive that we are in for a "jobless recovery," but, to me, the odds appear to be increasing.

So far the current recovery is even worse than "jobless"; it is a "job-loss" recovery.

by Calculated Risk on 10/21/2009 03:02:00 PM

From the Fed: Beige Book

Reports from the 12 Federal Reserve Districts indicated either stabilization or modest improvements in many sectors since the last report, albeit often from depressed levels. Leading the more positive sector reports among Districts were residential real estate and manufacturing, both of which continued a pattern of improvement that emerged over the summer. Reports on consumer spending and nonfinancial services were mixed. Commercial real estate was reported to be one of the weakest sectors, although reports of weakness or moderate decline were frequently noted in other sectors.

On real estate:

Most Districts reported that housing market conditions improved in recent weeks, primarily from a pickup in sales of low- to middle-priced houses. Contacts reported that sales were boosted by the government's tax credit for first-time homebuyers. Resale activity also edged up in parts of the New York District, although prices continued to be depressed due to a substantial volume of foreclosures and short sales. New and existing home sales remained flat in the Philadelphia District, and home sales continued to decline throughout the St. Louis District. Sales of higher-priced homes were very slow, according to Philadelphia, Cleveland, and Kansas City. Moreover, real estate agents in the Boston and Cleveland Districts were uncertain about the future of home sales once the tax credit expires. Availability of financing continued to be a concern for potential buyers in the Cleveland and Chicago Districts.
...
Commercial real estate continued to weaken across the 12 Districts, although even this sector had scattered bright spots. Each District indicated that demand for private commercial real estate was weak, with New York, Philadelphia, Cleveland, Atlanta, Chicago, St. Louis, Kansas City, and San Francisco all characterizing activity as declining further since the last report. An inability to obtain credit was often cited as a problem for businesses that wanted to purchase or build space. High vacancy rates were noted as a key concern especially for landlords who were not offering concessions. And, while industrial real estate in the Richmond District was generally weak, renewed interest by retailers to revisit postponed expansion plans was also noted. Finally, public nonresidential construction activity funded by federal stimulus projects was a source of strength in the Cleveland, Chicago, Minneapolis, and Dallas Districts, but gains were often offset by state and local government cutbacks.