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Sunday, February 28, 2010

Weekly Summary and a Look Ahead

by Calculated Risk on 2/28/2010 11:55:00 AM

This will be a busy week for economic data, and the focus will be on the BLS February employment report to be released on Friday. The consensus is for a net loss of 50 to 80 thousand payroll jobs, and the unemployment rate to increase slightly to 9.8% (from 9.7%).

There is considerable debate on the impact of the snow storms on the employment report. The BLS will disclose and adjust for any snow related data collection issues, but some hiring might have been delayed because of the storms. However, if so, there will be a bounce back in March - however it is important to remember that the weekly unemployment claims were moving higher before the storms arrived. Also the temporary hiring for the 2010 Census will have increased slightly - I'm sure all of these issues will be widely discussed ...

On Monday, the BEA will release the Personal Income and Outlays report for January. This release is very useful for looking at both Personal Income and Personal Consumption Expenditures (PCE). Also on Monday, the ISM Manufacturing index (consensus is for expansion, but a slight decrease to 57.5% from 58.4%), and the January Construction Spending report from the Census Bureau (consensus is for a decline of 0.5%).

On Tuesday, the various manufacturers will release light vehicle sales for February. The consensus is for a decline to about 10.4 million on a Seasonally Adjusted Annual Rate (SAAR) basis from 10.8 million in January. Sales for Toyota will be closely watched. Also on Tuesday, the Personal Bankruptcy Filings estimate for February will be released.

On Wednesday, the ADP Employment report and ISM Non-Manufacturing index (consensus is for a slight increase to 51% from 50.5%), and the Fed's beige book will all be released.

On Thursday, the closely watched initial weekly unemployment claims, productivity report, factory orders, and pending home sales will all be released.

And on Friday, the BLS employment report, Consumer Credit (more contraction), and another round of bank failures (I'm thinking Puerto Rico will make an appearance).

And a summary of last week ...

  • New Home Sales fall to Record Low in January

    New Home Sales and RecessionsClick on graph for larger image in new window.

    The Census Bureau reported that New Home Sales in January were at a seasonally adjusted annual rate (SAAR) of 309 thousand. This is a record low and a sharp decrease from the revised rate of 348 thousand in December.

    This graph shows New Home Sales vs. recessions for the last 45 years. New Home sales fell off a cliff, but after increasing slightly in 2009, sales have declined again and are now 6% below the previous record low set in January 2009.

  • Existing Home Sales Decline Sharply in January

    Existing Home Sales The NAR reported: Existing-Home Sales Down in January . Existing home sales were at a seasonally adjusted annual rate of 5.05 million units in January, down from a revised 5.44 million in December.

    Sales in Jan 2010 were 7.2% lower than last month, and were 11.5% higher than Jan 2009.

    This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.

    This is a sharp drop from November when many of the transactions were due to first-time homebuyers rushing to beat the initial expiration of the tax credit (that has been extended).

  • AIA: Architecture Billings Index Shows Contraction in January

    AIA Architecture Billing Index The American Institute of Architects’ Architecture Billings Index decreased to 42.5 in January from 43.4 in December.

    Note: This index is a leading indicator for Commercial Real Estate (CRE) investment.

    This graph shows the Architecture Billings Index since 1996. The index has remained below 50, indicating falling demand, since January 2008.

    Historically there is an "approximate nine to twelve month lag time between architecture billings and construction spending" on non-residential construction. This suggests further significant declines in CRE investment through this year, and probably longer.

  • FDIC Q4 Banking Profile: 702 Problem Banks

    Number of Problem Banks The FDIC released the Q4 Quarterly Banking Profile today. The FDIC listed 702 banks with $403 billion in assets as “problem” banks in Q4, up from 552 banks with $346 billion in assets in Q3, and 252 and $159.4 billion in assets in Q4 2008.

    This graph shows the number of FDIC insured "problem" banks since 1990.

    The 702 problem banks reported at the end of Q4 is the highest since 1992.

  • Case Shiller House Prices increased in December

    Case-Shiller House Prices Indices S&P/Case-Shiller released the monthly Home Price Indices for December (actually a 3 month average).

    This graph shows the nominal seasonally adjusted Composite 10 and Composite 20 indices (the Composite 20 was started in January 2000).

    The Composite 10 index is off 30.3% from the peak, and up about 0.3% in December.

    The Composite 20 index is off 29.4% from the peak, and up 0.3% in December.

    Case-Shiller Price Declines This graph shows the price declines from the peak for each city included in S&P/Case-Shiller indices. Prices decreased (SA) in 6 of the 20 Case-Shiller cities in December.

    In Las Vegas, house prices have declined 55.9% from the peak. At the other end of the spectrum, prices in Dallas are only off about 3.1% from the peak. Several cities are showing price increases in 2009 - San Diego, San Francisco, Boston, Washington D.C., Denver and Dallas.

  • Other Economic Stories ...

  • From San Francisco Fed President Janet Yellen: The Outlook for the Economy and Monetary Policy

  • From Cleveland Fed President Sandra Pianalto: "May take years to get back to 2007 level of output"

  • Weekly Initial Unemployment Claims Increase to 496,000

  • From Fannie Mae: Fannie Mae Reports $15.2 Billion Loss

  • From Freddie Mac: Freddie Mac: Delinquencies Increase Sharply in January

  • Moody's: CRE Prices increase 4.1% in December 2009

  • From First American CoreLogic: Q4 Report: 11.3 Million U.S. Properties with Negative Equity

  • From the American Trucking Associations: ATA Truck Tonnage Index Jumped 3.1 Percent in January

  • From the National Restaurant Association: Restaurant Performance Index Declines Slightly in January, But Optimism for Future Business Conditions Strengthens

  • From the BEA: Q4 GDP Revised to 5.9%

  • From James Hagerty at the WSJ: U.S. Weighs Changes to Mortgage-Relief Program

  • Unofficial Problem Bank List increases Significantly

    Best wishes to all.