by Calculated Risk on 5/03/2016 03:40:00 PM

Based on an estimate from AutoData, light vehicle sales were at a 17.42 million SAAR in April.

That is up about 4% from April 2015, and up about 6% from the 16.46 million annual sales rate last month.


Click on graph for larger image.

This graph shows the historical light vehicle sales from the BEA (blue) and an estimate for April (red, light vehicle sales of 17.42 million SAAR from AutoData).

This was slightly above the consensus forecast of 17.3 million SAAR (seasonally adjusted annual rate).

The second graph shows light vehicle sales since the BEA started keeping data in 1967.

Note: dashed line is current estimated sales rate.

Sales for 2016 - through the first four months - are up about 3% from the comparable period last year.

by Calculated Risk on 5/03/2016 12:07:00 PM

Note: This is an update to a post I wrote some time ago with more recent data and projections.

Here is something different, but it is important when looking at demographics ...

The following data is from the CDC United States Life Tables, 2010 by Elizabeth Arias.

The most frequently used life table statistic is life expectancy (ex), which is the average number of years of life remaining for persons who have attained a given age (x). ... Life expectancy at birth (e0) for 2010 for the total population was 78.7 years. ... Another way of assessing the longevity of the period life table cohort is by determining the proportion that survives to specified ages. ... To illustrate, 57,188 persons out of the original 2010 hypothetical life table cohort of 100,000 (or 57.2 %) were alive at exact age 80.
emphasis added

Instead of look at life expectancy, here is a graph of survivors out of 100,000 born alive, by age for three groups: those born in 1900-1902, born in 1949-1951 (baby boomers), and born in 2010.

Click on graph for larger image.

There was a dramatic change between those born in 1900 (blue) and those born mid-century (orange). The risk of infant and early childhood deaths dropped sharply, and the risk of death in the prime working years also declined significantly.

The CDC is projecting further improvement for childhood and prime working age for those born in 2010, but they are also projecting that people will live longer.

The second graph uses the same data but looks at the number of people who die before a certain age, but after the previous age. As an example, for those born in 1900 (blue), 12,448 of the 100,000 born alive died before age 1, and another 5,748 died between age 1 and age 5.  That is 18.2% of those born in 1900 died before age 5.

In 1950, only 3.5% died before age 5.  In 2010, it was 0.7%.

The peak age for deaths didn't change much for those born in 1900 and 1950 (between 76 and 80, but many more people born in 1950 will make it).

Now the CDC is projection the peak age for deaths - for those born in 2010 - will increase to 86 to 90!

Also the number of deaths for those younger than 20 will be very small (down to mostly accidents, guns, and drugs).  Self-driving cars might reduce the accident components of young deaths.

In 1900, 25,2% died before age 20.  And another 26.8% died before 55.

In 1950, 5.3% died before age 20.  And another 18.7% died before 55.  A dramatic decline in early deaths.

In 2010, 1.5% are projected to die before age 20.  And only 9.7% before 55.  A dramatic decline in prime working age deaths.

An amazing statistic: for those born in 1900, about 13 out of 100,000 made it to 100.  For those born in 1950, 199 are projected to make to 100 - an significant increase.   Now the CDC is projecting that 1,968 out of 100,000 born in 2010 will make it to 100.  Stunning!

Some people look at this data and worry about supporting all the old people.  To me, this is all great news - the vast majority of people can look forward to a long life - with fewer people dying in childhood or during their prime working years.  Awesome!

by Calculated Risk on 5/03/2016 09:35:00 AM

Notes: This CoreLogic House Price Index report is for March. The recent Case-Shiller index release was for February. The CoreLogic HPI is a three month weighted average and is not seasonally adjusted (NSA).

From CoreLogic: CoreLogic US Home Price Report Shows Home Prices Up 6.7 Percent Year Over Year in March 2016

Home prices nationwide, including distressed sales, increased year over year by 6.7 percent in March 2016 compared with March 2015 and increased month over month by 2.1 percent in March 2016 compared with February 2016, according to the CoreLogic HPI.
...
“Home prices reached the bottom five years ago, and since then have appreciated almost 40 percent,” said Anand Nallathambi, president and CEO of CoreLogic. “The highest appreciation was in the West, where prices continue to increase at double-digit rates.”
emphasis added

Click on graph for larger image.

This graph shows the national CoreLogic HPI data since 1976. January 2000 = 100.

The index was up 2.1% in March (NSA), and is up 6.7% over the last year.

This index is not seasonally adjusted, and this was a solid month-to-month increase.

The index is still 5.3% below the bubble peak in nominal terms (not inflation adjusted).

The second graph shows the YoY change in nominal terms (not adjusted for inflation).

The YoY increase had been moving sideways over the last year, but has picked up a little recently.

The year-over-year comparison has been positive for forty nine consecutive months.

by Calculated Risk on 5/02/2016 07:52:00 PM

Tuesday:
• All day, Light vehicle sales for April. The consensus is for light vehicle sales to increase to 17.3 million SAAR in April from 16.6 million in March (Seasonally Adjusted Annual Rate).

A few excerpts from a research piece by Goldman Sachs economist Jan Hatzius: Does the Fed Want Inflation to Overshoot?

Many investors believe that the Fed has significantly changed its attitude to an inflation overshoot above 2%. The strong version of this view is that Janet Yellen is stealthily following the “optimal control” path she laid out in 2012 and is therefore targeting an overshoot. We think this is wrong. ...

The weaker version is that the target has become more unambiguously symmetric, and that many Fed officials would privately regard a limited overshoot as helping establish that symmetry in the public’s mind. This is probably correct. But the FOMC would still want to prevent the overshoot from getting too large, and would therefore tighten policy more quickly than in the baseline. ...

by Calculated Risk on 5/02/2016 02:15:00 PM

From the Federal Reserve: The April 2016 Senior Loan Officer Opinion Survey on Bank Lending Practices

Regarding loans to businesses, the April survey results indicated that, on balance, banks tightened their standards on commercial and industrial (C&I) and commercial real estate (CRE) loans over the first quarter of 2016.3 The survey results indicated that demand for C&I loans had weakened and that demand for CRE loans had strengthened during the first quarter on net.

The first of two sets of special questions asked banks about lending to firms in the oil and natural gas drilling or extraction sector. The majority of domestic banks reported that loans to firms in this sector account for less than 5 percent of their outstanding C&I loans. In contrast, the majority of foreign banks reported that loans to firms in this sector account for more than 5 percent of their outstanding C&I loans. On balance, both domestic and foreign banks expect delinquency and charge-off rates on such loans to deteriorate over 2016 and noted that they were undertaking several actions to mitigate the risk of loan losses. In addition, on balance, banks indicated that the credit quality of loans made to businesses and households located in regions of the United States that are dependent on the energy sector had deteriorated somewhat.

Regarding loans to households, banks reported having eased lending standards on most types of residential real estate (RRE) mortgage loans, while demand for these loans strengthened over the first quarter. Modest net fractions of banks reported easing lending standards on credit cards and other consumer loans, whereas lending standards for auto loans remained basically unchanged. Over the first quarter, banks reported stronger demand across all consumer loan categories.
emphasis added

by Calculated Risk on 5/02/2016 12:31:00 PM

Earlier today, the Census Bureau reported that overall construction spending increased 0.3% in March compared to February:

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during March 2016 was estimated at a seasonally adjusted annual rate of $1,137.5 billion, 0.3 percent above the revised February estimate of $1,133.6 billion. The March figure is 8.0 percent above the March 2015 estimate of $1,052.9 billion.

Private spending increased and public spending decreased in March:

Spending on private construction was at a seasonally adjusted annual rate of $842.3 billion, 1.1 percent above the revised February estimate of $832.8 billion. ...

In March, the estimated seasonally adjusted annual rate of public construction spending was $295.2 billion, 1.9 percent below the revised February estimate of $300.8 billion.
emphasis added

Click on graph for larger image.

This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.

Private residential spending has been increasing, but is 36% below the bubble peak.

Non-residential spending is only 2% below the peak in January 2008 (nominal dollars).

Public construction spending is now 9% below the peak in March 2009.

The second graph shows the year-over-year change in construction spending.

On a year-over-year basis, private residential construction spending is up 8%. Non-residential spending is up 9% year-over-year. Public spending is up 7% year-over-year.

Looking forward, all categories of construction spending should increase in 2016. Residential spending is still very low, non-residential is increasing (except oil and gas), and public spending is also increasing after several years of austerity.

This was below the consensus forecast of a 0.5% increase for March, and construction spending for February and January were revised down.

by Calculated Risk on 5/02/2016 10:04:00 AM

The ISM manufacturing index indicated expansion for the second consecutive month in April, following five months of contraction. The PMI was at 50.8% in April, down from 51.8% in March. The employment index was at 49.2%, up from 48.1% in March, and the new orders index was at 55.8%, down from 58.3% in March.

From the Institute for Supply Management: April 2016 Manufacturing ISM® Report On Business®

Economic activity in the manufacturing sector expanded in April for the second consecutive month, while the overall economy grew for the 83rd consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee. "The April PMI® registered 50.8 percent, a decrease of 1 percentage point from the March reading of 51.8 percent. The New Orders Index registered 55.8 percent, a decrease of 2.5 percentage points from the March reading of 58.3 percent. The Production Index registered 54.2 percent, 1.1 percentage points lower than the March reading of 55.3 percent. The Employment Index registered 49.2 percent, 1.1 percentage points above the March reading of 48.1 percent. Inventories of raw materials registered 45.5 percent, a decrease of 1.5 percentage points from the March reading of 47 percent. The Prices Index registered 59 percent, an increase of 7.5 percentage points from the March reading of 51.5 percent, indicating higher raw materials prices for the second consecutive month. Manufacturing registered growth in April for the second consecutive month, as 15 of our 18 industries reported an increase in new orders in April (up from 13 in March), and 15 of our 18 industries reported an increase in production in April (up from 12 in March)."
emphasis added

Click on graph for larger image.

Here is a long term graph of the ISM manufacturing index.

This was below expectations of 51.5%, and suggests manufacturing expanded at a slower pace in April than in March.

by Calculated Risk on 5/02/2016 09:12:00 AM

Black Knight Financial Services (BKFS) released their Mortgage Monitor report for March today. According to BKFS, 4.08% of mortgages were delinquent in March, down from 4.66% in March 2015, and the lowest since March 2007. BKFS also reported that 1.25% of mortgages were in the foreclosure process, down from 1.68% a year ago.

This gives a total of 5.33% delinquent or in foreclosure.

Press Release: Black Knight's Mortgage Monitor: Home Price Increases Muting Affordability Gains from Low Interest Rates; Refinanceable Population Grows to 7.5 Million

Today, the Data & Analytics division of Black Knight Financial Services, Inc. released its latest Mortgage Monitor Report, based on data as of the end of March 2016. This month, in light of mortgage interest rates falling by approximately 35 basis points (BPS) since the start of 2016, Black Knight examined how these lower rates have impacted home affordability. Calculating principal and interest payments based on a fixed-rate mortgage with a 30-year term and 80 percent loan-to-value (LTV) ratio, Black Knight examined how much per month it would cost a borrower to purchase the median-priced home at the national and state levels. All else being equal, interest rate declines would save borrowers significant money on such a purchase, but as Black Knight Data & Analytics Senior Vice President Ben Graboske explained, rising home prices are muting – and in some areas, completely cancelling out – the positive impact declining rates would have on home affordability.

"Excluding home price movement, the interest rate decline since the start of the year would save borrowers approximately $44 a month when purchasing the median-priced home nationally," said Graboske. "However, when you factor in estimated home price appreciation (HPA) – the most recent Black Knight Home Price Index Report for February showed annual HPA at 5.3 percent – those monthly savings fall to just $18. ”
emphasis added

Click on graph for larger image.

These graphs from Black Knight show measures of mortgage performance

From Black Knight:

• Overall delinquencies continue to improve, falling 8 percent month-over-month, 12 percent year-over-year, and – as mentioned on the previous page – are now at their lowest point since March 2007

• 30-day delinquencies continue to drop as well, and are currently sitting at 1.95 percent, the lowest level seen in well over 15 years, driven by pristine performance in recent vintages

• Severely delinquent loan populations (90 or more days delinquent or in active foreclosure) continue to linger in the market; 90+ is 45 percent above and the foreclosure rate is more than 2x above normal levels

• In a “normal” market, 30-day delinquent loans would account for roughly 55 percent of non-current loans; in today’s overly “back heavy” market, they only make up about 37 percent

• As additional severely delinquent loans are removed from the market, delinquency rates will likely continue to dip below “normal” levels in an overcorrection of the market

There is much more in the mortgage monitor.

by Calculated Risk on 5/01/2016 08:21:00 PM

Weekend:
• Schedule for Week of May 1, 2016

• Energy expenditures as a percentage of PCE hit another All Time Low in March

Monday:
• At 10:00 AM ET, ISM Manufacturing Index for April. The consensus is for the ISM to be at 51.5, down from 51.8 in March. The ISM manufacturing index indicated expansion at 51.8% in March. The employment index was at 48.1%, and the new orders index was at 58.3%.

• Also at 10:00 AM, Construction Spending for March. The consensus is for a 0.5% increase in construction spending.

• At 2:00 PM, the April 2016 Senior Loan Officer Opinion Survey on Bank Lending Practices from the Federal Reserve.

From CNBC: Pre-Market Data and Bloomberg futures: S&P and DOW futures are mostly unchanged (fair value).

Oil prices were up over the last week with WTI futures at $45.62 per barrel and Brent at $47.05 per barrel.  A year ago, WTI was at $59, and Brent was at $64 - so prices are down about 25% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.22 per gallon (down about $0.35 per gallon from a year ago).

by Calculated Risk on 5/01/2016 10:35:00 AM

Note: Last month I noted that energy expenditures as a percentage of PCE had hit an all time low. Here is an update through the March 2016 PCE report.

Below is a graph of expenditures on energy goods and services as a percent of total personal consumption expenditures through March 2016.

This is one of the measures that Professor Hamilton at Econbrowser looks at to evaluate any drag on GDP from energy prices.


Click on graph for larger image.

Data source: BEA Table 2.3.5U.

The huge spikes in energy prices during the oil crisis of 1973 and 1979 are obvious. As is the increase in energy prices during the 2001 through 2008 period.

In March 2016, energy expenditures as a percentage of PCE declined to another all time low of just under 3.7%.

However, WTI oil prices increased from $30.32 per barrel in February to $37.55 in March - so energy as a percentage of PCE will probably increase a little over the next few months.