by Calculated Risk on 5/27/2016 08:33:00 AM

From the BEA: Gross Domestic Product: First Quarter 2015 (Second Estimate)

Real gross domestic product -- the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production, adjusted for price changes -- increased at an annual rate of 0.8 percent in the first quarter of 2016, according to the "second" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 1.4 percent.

The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was 0.5 percent. With the second estimate for the first quarter, the decrease in private inventory investment was smaller than previously estimated ...
emphasis added

Here is a Comparison of Second and Advance Estimates. PCE growth was unrevised at 1.9%. Residential investment was revised up from 14.8% to 17.1%.  This was close to the consensus forecast.

by Calculated Risk on 5/26/2016 07:22:00 PM

A few excerpts from a research piece by Ethan Harris at Merrill Lynch: Fed Watch: June, July or September?

It is now clear that June is very much on the table. What is less clear is whether the Fed is just protesting the super-low probability priced into the markets or is setting us up for a June hike. In other words, should we stick to our September call or flip flop?

We are sticking to September. In our view, the distribution of outcomes is very flat, but September still seems most consistent with Yellen’s high risk aversion. June seems a bit early given how dovish she has sounded. Moreover, with the market pricing in just a 34% chance of a move, it would shock the markets and bring into question their credibility. This would draw attention to the competence of the Fed during an election year. The Fed would also be moving in front of the Brexit vote, a potential serious shock to financial markets. What is the cost of waiting?

July is also live, but suffers the usual problem of not having a scheduled press conference. The Fed has made it clear that they can call a press conference on short notice. However, it would still require meticulous preparation from Yellen. ...

This is a close call and we will be nimble going forward. Payrolls on June 2nd and a Yellen speech on June 6th could change our mind. In our view, the Fed will want the market to be pricing in at least a 50% probability before it moves and hawkish news from these events could do the trick. Regardless of the exact timing, we think the economy and inflation are a lot more resilient than the markets believe. Hence, the Fed is likely to hike more than what the bond market is pricing in over the next several years

Friday:
• At 8:30 AM ET, Gross Domestic Product, 1st quarter 2016 (Second estimate). The consensus is that real GDP increased 0.9% annualized in Q1, revised up from a 0.5% increase.

• At 10:00 AM, University of Michigan's Consumer sentiment index (final for May). The consensus is for a reading of 95.5, down from the preliminary reading 95.8, and up from 89.0 in April.

• At 1:15 PM, Discussion with Fed Chair Janet Yellen, A conversation with Professor Gregory Mankiw, followed by the presentation of the Radcliffe Medal to Chair Yellen. Watch live here.

by Calculated Risk on 5/26/2016 01:40:00 PM

The automakers will report May vehicle sales on Wednesday, June 1st.

Note:  There were 24 selling days in May, down from 26 in May 2015.

From WardsAuto: May Forecast Calls for Improved Sales, Days’ Supply

WardsAuto forecast calls for U.S. automakers to deliver 1.52 million light vehicles in May.

The forecast daily sales rate of 63,443 units over 24 days represents a 1.3% improvement from like-2015 (26 days), while total volume for the month would fall 6.5% from year-ago. The 14.4% DSR increase from April (27 days) is ahead of the 7-year average 8% growth.

The report puts the seasonally adjusted annual rate of sales for the month at 17.3 million units, slightly above the 17.1 million SAAR from the first four months of the year, but below the 17.6 million SAAR reached in May 2015.
emphasis added

From Kelley Blue Book: Despite Memorial Day Sales, New-car Sales To Decrease 6 Percent In May 2016, According To Kelley Blue Book

New-vehicle sales are expected to decrease 6 percent year-over-year to a total of 1.53 million units in May 2016, resulting in an estimated 17.4 million seasonally adjusted annual rate (SAAR), according to Kelley Blue Book ...

And from J.D. Power: Memorial Day Weekend Is Key to May’s New-Vehicle Retail Sales

The SAAR for total sales is projected at 17.4 million units in May 2016, down from 17.7 million a year ago.

Looks like another strong month for vehicle sales, but down from May 2015.

by Calculated Risk on 5/26/2016 11:36:00 AM

From the Kansas City Fed: Tenth District Manufacturing Activity Declined Modestly

The Federal Reserve Bank of Kansas City released the May Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that Tenth District manufacturing activity declined modestly.

“Regional factory activity continued to drift down in May, as weakness in energy and agriculture-related manufacturing persisted,” said Wilkerson. “Still, firms expect a modest pickup in activity later this year.”
...
The month-over-month composite index was -5 in May, which is largely unchanged from April and March readings ...
emphasis added

The Kansas City region was hit hard by lower oil prices.

by Calculated Risk on 5/26/2016 10:03:00 AM

From the NAR: Pending Home Sales Lift Off in April to Over 10-Year High

Pending home sales rose for the third consecutive month in April and reached their highest level in over a decade, according to the National Association of Realtors®. All major regions saw gains in contract activity last month except for the Midwest, which saw a meager decline.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, hiked up 5.1 percent to 116.3 in April from an upwardly revised 110.7 in March and is now 4.6 percent above April 2015 (111.2). After last month's gain, the index has now increased year-over-year for 20 consecutive months.
...
The PHSI in the Northeast climbed 1.2 percent to 98.2 in April, and is now 10.1 percent above a year ago. In the Midwest the index declined slightly (0.6 percent) to 112.9 in April, but is still 2.0 percent above April 2015.

Pending home sales in the South jumped 6.8 percent to an index of 133.9 in April and are 5.1 percent higher than last April. The index in the West soared 11.4 percent in April to 106.2, and is now 2.8 percent above a year ago.
emphasis added

This was way above expectations of a 0.8% increase for this index.  Note: Contract signings usually lead sales by about 45 to 60 days, so this would usually be for closed sales in May and June.

by Calculated Risk on 5/26/2016 08:33:00 AM

The DOL reported:

In the week ending May 21, the advance figure for seasonally adjusted initial claims was 268,000, a decrease of 10,000 from the previous week's unrevised level of 278,000. The 4-week moving average was 278,500, an increase of 2,750 from the previous week's unrevised average of 275,750.

There were no special factors impacting this week's initial claims. This marks 64 consecutive weeks of initial claims below 300,000, the longest streak since 1973.

The previous week was unrevised.

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

Click on graph for larger image.


The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased to 278,500.

This was below the consensus forecast. The low level of claims suggests relatively few layoffs.

by Calculated Risk on 5/25/2016 08:05:00 PM

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released.  The consensus is for 275 thousand initial claims, down from 278 thousand the previous week.

• Also at 8:30 AM, Durable Goods Orders for April from the Census Bureau. The consensus is for a 0.3% increase in durable goods orders.

• At 10:00 AM, Pending Home Sales Index for April. The consensus is for a 0.8% increase in the index.

• At 11:00 AM, Kansas City Fed Survey of Manufacturing Activity for May.

From Tim Duy: Should The Fed Tolerate 5% Unemployment?

In recent posts I highlighted the stagnant unemployment rate. I believe the Fed is on thin ice by raising rates when unemployment is moving sideways, especially when there exists evidence of substantial underemployment (see also this FEDS note). But there is also evidence of growing wage pressures, in particular the Atlanta Fed wage measure ...
...
It seems to me then that a central bank with a symmetric inflation target would choose to refrain from further rate hikes when progress toward full employment had clearly decelerated

by Calculated Risk on 5/25/2016 05:16:00 PM

From the Philly Fed:

he Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for April 2016. In the past month, the indexes increased in 39 states, decreased in seven, and remained stable in four, for a one-month diffusion index of 64. Over the past three months, the indexes increased in 42 states, decreased in seven, and remained stable in one, for a three-month diffusion index of 70

Note: These are coincident indexes constructed from state employment data. An explanation from the Philly Fed:

The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.

Click on graph for larger image.

This is a graph is of the number of states with one month increasing activity according to the Philly Fed. This graph includes states with minor increases (the Philly Fed lists as unchanged).

In April, 41 states had increasing activity including minor increases.

Five states have seen declines over the last 6 months, in order they are Wyoming (worst), North Dakota, Alaska, Louisiana and Oklahoma - mostly due to the decline in oil prices.

Here is a map of the three month change in the Philly Fed state coincident indicators. This map was all red during the worst of the recession, and is mostly green now.

Source: Philly Fed.

by Calculated Risk on 5/25/2016 12:11:00 PM

Economist Tom Lawler sent me the table below of short sales, foreclosures and all cash sales for selected cities in April.

On distressed: Total "distressed" share is down in all of these markets.

Short sales and foreclosures are down in all of these areas.

The All Cash Share (last two columns) is mostly declining year-over-year. As investors continue to pull back, the share of all cash buyers continues to decline.

	Short Sales Share		Foreclosure Sales Share		Total "Distressed" Share		All Cash Share
	Apr- 2016	Apr- 2015	Apr- 2016	Apr- 2015	Apr- 2016	Apr- 2015	Apr- 2016	Apr- 2015
Las Vegas	4.5%	7.2%	7.1%	8.3%	11.6%	15.5%	28.1%	30.4%
Reno**	2.0%	6.0%	3.0%	5.0%	5.0%	11.0%
Phoenix	1.6%	2.5%	2.4%	3.8%	3.9%	6.3%	23.8%	25.3%
Sacramento	3.1%	5.6%	3.4%	6.6%	6.5%	12.2%	17.7%	18.4%
Minneapolis	2.0%	2.9%	7.0%	9.2%	9.0%	12.1%	12.0%	14.0%
Mid-Atlantic	3.5%	4.5%	11.1%	12.9%	14.6%	17.3%	17.2%	17.2%
So. California*	2.5%	3.5%	3.4%	4.4%	5.9%	7.9%	21.3%	23.8%
Bay Area CA*					3.7%	5.2%	20.2%	21.5%
Florida SF	2.6%	4.0%	10.4%	19.4%	13.1%	23.4%	31.2%	37.1%
Florida C/TH	1.2%	2.0%	7.1%	14.7%	8.3%	16.7%	60.2%	65.4%
Miami MSA SF	3.4%	6.3%	12.2%	18.5%	15.6%	24.7%	32.0%	37.9%
Miami MSA C/TH	1.3%	2.4%	10.1%	18.4%	11.3%	20.8%	62.8%	68.6%
Tampa MSA SF	2.9%	4.6%	11.4%	20.5%	14.3%	25.1%	30.0%	34.4%
Tampa MSA C/TH	1.4%	2.8%	6.8%	15.5%	8.2%	18.3%	55.1%	60.9%
Chicago (city)					14.0%	20.3%
Northeast Florida					18.7%	28.6%
Spokane					7.2%	16.2%
Rhode Island					10.4%	16.6%
Richmond VA					9.6%	11.5%	18.0%	18.2%
Tucson							26.8%	27.1%
S.C. Wisconsin							14.6%	18.3%
Knoxville							19.9%	23.0%
Peoria							18.0%	17.3%
Omaha							14.5%	16.4%
Pensacola							27.3%	32.3%
Memphis*			12.4%	15.9%
Springfield IL**			8.1%	10.2%
*share of existing home sales, based on property records **Single Family Only

by Calculated Risk on 5/25/2016 09:18:00 AM

From the FHFA: U.S. House Prices Rise 1.3 Percent in First Quarter; 19 Consecutive Quarterly Increases

U.S. house prices rose 1.3 percent in the first quarter of 2016 according to the Federal Housing Finance Agency (FHFA) House Price Index (HPI). This is the nineteenth consecutive quarterly price increase in the purchase-only, seasonally adjusted index. House prices rose 5.7 percent from the first quarter of 2015 to the first quarter of 2016. This is the fourth consecutive year in which prices grew more than 5 percent. FHFA's seasonally adjusted monthly index for March was up 0.7 percent from February. The HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. ...

"While the overall appreciation rate was robust in the first quarter, home price appreciation was somewhat less widespread than in recent quarters," said FHFA Supervisory Economist Andrew Leventis. "Twelve states and the District of Columbia saw price declines in the quarter—the most areas to see price depreciation since the fourth quarter of 2013. Although most declines were modest, such declines are notable given the pervasive and extraordinary appreciation we have been observing for many years."

While the purchase-only HPI rose 5.7 percent from the first quarter of 2015 to the first quarter of 2016, prices of other goods and services were nearly unchanged. The inflation-adjusted price of homes rose approximately 5.6 percent over the latest year.
emphasis added

And on local HPIs:

With this quarter's release, FHFA is publishing a set of experimental annual house price indexes for five-digit ZIP codes across the country from 1975―2015.​ The indexes are constructed using the typical "repeat-transactions" methodology. Unlike FHFA's other price indexes, however, the five-digit ZIP code measures are annual price measures, meaning that a single index value is produced for each year. As discussed in FHFA Working Paper 16-01, the new indexes may be valuable to analysts seeking data on localized home price movements.

I'm checking on my zip code!