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Sunday, June 06, 2010

Weekly Summary and a Look Ahead

by Calculated Risk on 6/06/2010 11:59:00 AM

The key economic report this week will be April retail sales to be released on Friday.

On Monday, the Fed will release Consumer Credit for April at 3 PM ET. Consumer credit has declined sharply since mid-2008, especially revolving debt (credit cards). Also this week, the May rail traffic report from the Association of American Railroads (AAR) and May LA port traffic will probably be released.

On Tuesday, the National Association of Independent Business (NFIB) will release the small business optimism survey for May. The NFIB pre-released the employment survey on Friday and the employment outlook was described as “bleak”. Also on Tuesday the Job Openings and Labor Turnover Survey (JOLTS) for April will be released at 10 AM by the BLS. This report has been showing very little turnover in the labor market and few job openings.

On Wednesday, the MBA will release the mortgage purchase applications index. This has been falling sharply suggesting a sharp decline in home sales after the expiration of the tax credit. Also on Wednesday, Wholesale Inventories and the Fed’s Beige Book will be released. Fed Chairman Ben Bernanke will testify at 10 AM before the house budget committee (the hearing is about the State of the Economy: View from the Federal Reserve), and the NY Fed’s Brian Sack will speak at noon at the New York Association of Business Economics.

On Thursday the April Trade Balance report will be released at 8:30 AM by the Census Bureau. The consensus is for a further increase in the U.S. trade deficit to around $41 billion (from $40.4 billion). Also on Thursday, the closely watched initial weekly unemployment claims will be released. Consensus is for a decline to 448K from 453K last week.

Also on Thursday, the Fed will release the Q1 Flow of Funds report, and the May Ceridian-UCLA Pulse of Commerce Index (based on diesel fuel consumption) will be released. Last month this was the one of the first indicators that showed the economy slowed in April.

On Friday May retail sales will be released at 8:30 AM. The consensus is for an increase of 0.3% from the April rate, and 0.1% increase ex-autos. Also the May Reuter's/University of Michigan's Consumer sentiment index will be released at 9:55 AM, and April Business inventories will be released at 10 AM.

And of course the FDIC will probably have another busy Friday afternoon ...

And a summary of last week:

  • May Employment Report: 20K Jobs ex-Census, 9.7% Unemployment Rate

    From the BLS:
    Total nonfarm payroll employment grew by 431,000 in May, reflecting the hiring of 411,000 temporary employees to work on Census 2010, the U.S. Bureau of Labor Statistics reported today. ... The unemployment rate edged down to 9.7 percent.
    Percent Job Losses During Recessions Click on graphs for a larger image.

    This graph shows the job losses from the start of the employment recession, in percentage terms. This really shows how stunning the job losses were during the great recession.

    The dotted line is the job losses ex-Census. Census 2010 hiring was 411,000 in May.

    The recession that started in 2007 was by far the worst recession since WWII in percentage terms, and 2nd worst in terms of the unemployment rate (only early '80s recession with a peak of 10.8 percent was worse).

    Percent Job Losses During RecessionsThis graph shows the same data, but this time aligned at the bottom of the recession.

    Notice that the 1990 and 2001 recessions were followed by jobless recoveries - and the eventual job recovery was gradual. In earlier recessions the recovery was somewhat similar and a little faster than the decline (somewhat symmetrical).

    Employment Population Ratio This graph shows the Employment-Population ratio. The ratio decreased to 58.7% in May (from 58.8% in April). This had been increasing after plunging since the start of the recession.

    Note: the graph doesn't start at zero to better show the change.

    The Labor Force Participation Rate decreased to 65.0% from 65.2% in April. This is the percentage of the working age population in the labor force. This decline is disappointing. The decline in participation was a key reason the unemployment rate declined.

    Unemployed Over 26 Weeks This graph shows the long term unemployed. The blue line is the number of workers unemployed for 27 weeks or more. The red line is the same data as a percent of the civilian workforce.

    According to the BLS, there were a record 6.72 million workers who had been unemployed for more than 26 weeks (and still want a job). This was a record 4.34% of the civilian workforce. (note: records started in 1948)

  • U.S. Light Vehicle Sales 11.6 Million SAAR in May

    Vehicle Sales Based on an estimate from Autodata Corp, light vehicle sales were at a 11.63 million SAAR in May. This is up 18.1% from May 2009 (when sales were very low), and up 3.9% from the April sales rate.

    This graph shows the historical light vehicle sales (seasonally adjusted annual rate) from the BEA (blue) and an estimate for May (red, light vehicle sales of 11.63 million SAAR from Autodata Corp).

  • Personal Bankruptcy Filings increase 9% compared to May 2009

    non-business bankruptcy filings The 136,142 consumer bankruptcies filed in May represented a 9 percent increase from May 2009 total.

    This graph shows the non-business bankruptcy filings by quarter using monthly data from the ABI and previous quarterly data from

    The American Bankruptcy Institute (ABI) has increased their forecast to over 1.6 million filings this year .

  • Construction Spending increased in April

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

    Private residential construction spending appears to have bottomed in early 2009, but has been mostly moving sideways since then. Residential spending is now 61% below the peak of early 2006.

    Private non-residential construction spending is now 29% below the peak of late 2008.

  • Other Economic Stories ...

  • From Eurostat: Euro area unemployment rate at 10.1%

  • From the Institute for Supply Management: ISM Manufacturing ISM index shows exapansion in May. PMI at 59.7% in May, down from 60.4% in April.

  • MBA: Mortgage Purchase Applications lowest level since April 1997

  • Unofficial Problem Bank List: Assets increase sharply

    Best wishes to all.