by Calculated Risk on 10/18/2005 12:14:00 PM

The Ports of Long Beach and Los Angeles combined reported record import traffic for September.

Import traffic at the Port of Long Beach increased 2.4% compared to August, setting a new import traffic record. A total of 313.5 thousand loaded cargo containers came into the Port of Long Beach, compared to 306 thousand in August.

The Port of Los Angeles import traffic increased 2.2% in September. Imports were 350.8 thousand containers, just below the all time high for the Port of Los Angeles.

For Long Beach, outbound traffic was off 12% to 97 thousand containers. At Los Angeles, outbound traffic was down 2% to 93 thousand containers.

The quantity of containers says nothing about the content value, but provides a rough guide on imports from China and the rest of Asia. With these numbers, I expect record imports from China for September.

Imports up, exports down.

by Calculated Risk on 10/17/2005 05:04:00 PM

The OC Register reports on one of the closest watched housing markets: O.C. home prices decline

Orange County's home prices fell slightly off their record high in September.

The median selling prices for all residences last month was $610,000, down from $617,000 in August but still up 14 percent from September 2004, market tracker DataQuick reported Monday morning.

The local housing market has been on a roll this year. In August, Orange County home prices had set record high in six out of the past eight months.

Sales activity was strong in September, with sales at 4,072 – up 13 percent from a year ago.

And from DataQuick: Southland home sales still near peak

A total of 31,740 new and resale homes were sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was down 7.4 percent from 34,292 in August, and up 6.0 percent from 29,942 for September last year, according to DataQuick Information Systems.

A decline from August to September is normal for the season. Last month's sales count made for the third-strongest September in DataQuick's statistics, which go back to 1988. Sales totaled 32,813 two years ago, and in September 1988 sales totaled 34,653. The low for that month was in 1992 with 12,838 sales.
...
The median price paid for a Southern California home was $475,000 last month. That was down 0.2 percent from $476,000 in August, and up 16.1 percent from $409,000 for September 2004.

Year-over-year changes in the median price ranged from 3.8 percent in San Diego County to 32.8 percent in San Bernardino County. The median in both counties hit a new peak.
...
The typical monthly mortgage payment that Southland buyers committed themselves to paying was $2,098 last month, down from $2,123 for the previous month, and up from $1,809 for September a year ago. Adjusted for inflation, current payments are slightly below their peak in the spring of 1989.

by Calculated Risk on 10/17/2005 03:59:00 PM

Jakob Nielson provides an interesting summary of Weblog Usability: The Top Ten Design Mistakes.

The readers make this blog for me. I've met many great people via the comments or email and any feedback and/or suggestions is appreciated.

Here are Nielson's Ten Mistakes:

1. No Author Biographies - Guilty. I do provide a short blurb on my background.

2. No Author photo - Guilty. No one wants to see my ugly mug!

3. Nondescript Posting Titles - OK, I try to make the subject clear although I sometimes group several disparate ideas into one post.

4. Links Don't Say Where They Go - Guilty. I'll try to be more clear.

5. Classic Hits are Buried - Guilty. Some of my older posts might be of interest to new readers.

6. The Calendar is the Only Navigation - mostly Guilty. Unless you know when I wrote a post or the subject (and use search), it is hard to find previous material.

7. Irregular Publishing Frequency - OK, I post fairly frequently.

8. Mixing Topics - OK, although I jump between economic topics, I think they are fairly related. For the most part, I've dropped my comments on politics (except as related to economics).

9. Forgetting That You Write for Your Future Boss - No problem for me.

10. Having a Domain Name Owned by a Weblog Service - Guilty.

Apparently my site isn't very usable. Any and all comments and suggestions are welcome!

by Calculated Risk on 10/16/2005 09:52:00 PM

UPDATE2: Dr. Thoma provides excerpts and commentary on Krugman's The Big Squeeze

My most recent post is up on Angry Bear, Housing: Ready for the Fall

Real prices for the US housing market almost certainly fell in Q3 2005. Real prices are an excellent leading indicator for nominal prices. In the early '90s housing bust in California, real prices peaked in Q2 1990 and nominal prices in Q1 1991 (according to the OFHEO House Price Index and adjusted by CPI less shelter from the BLS). This is a common pattern for housing busts.

And on the UK 'bust', Joshua sent me this story: High street 'heading for a Christmas Armageddon'

Retailers are facing an "Armageddon" this Christmas, with high street sales at their weakest for two decades, according to one of the industry's most senior analysts.

Verdict Research, headed by Richard Hyman, will tomorrow forecast that retail sales in value terms will rise by just 2.1pc in the last three months of 2005, compared with 3.3pc growth a year earlier.

The sluggish growth figures follow a year of weak sales and rising costs. "It's going to be worse than last year and it's worse by a lot," said Mr Hyman.

He described the scenario as "retail Armageddon", adding: "This has been the most difficult and challenging year in modern times, no question about it. And what we are seeing is not cyclical, it is much more fundamental."

UPDATE: More on the UK: Brown 'ignoring signs of slowdown'

Chancellor Gordon Brown has been criticised by a leading think tank for failing to heed warning signs about a slowdown in the UK economy.

The Ernst & Young Item Club said Mr Brown could not blame external events such as high oil prices for the weakening growth rate, which it forecast to be around 1.6% this year, rather than the Treasury's Budget estimate of 3% to 3.5%.

Item's chief economic adviser Professor Peter Spencer said the UK economy was "on increasingly shaky ground" and could not rely on consumer spending and interest rate cuts to bolster growth.

He said: "The Chancellor is blaming the UK economic slowdown on the recent spike in oil prices and the weakness of the European economy, but this is unrealistic.
...
He added that the UK's problems were home-grown and stemmed from a booming housing market and strong consumer spending, which has propped up the UK economy until now.
...
He added: "The prospects for the business sector are still excellent and we have assumed a modest rise in exports and investment next year that would allow interest rates to remain on hold. However, if business fails to respond rates will be cut again in the New Year."

by Calculated Risk on 10/14/2005 12:04:00 PM

UPDATE: Dr. Altig's take: The CPI Report: Very Interesting

UPDATE2: Also see Dr. Hamilton's take: Inflation's back?

The BLS reported:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 1.2 percent in September, before seasonal adjustment, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The September level of 198.8 (1982-84=100) was 4.7 percent higher than in September 2004.

Reader Gary Evans suggested I look at some of the components. Here are a few:
Fun CPI numbers (over last 12 months):

All items	4.69%
Energy	35.14%	8% of CPI
Medical Care	3.93%	6.1% of CPI
Food	2.52%	14.3% of CPI
Shelter	1.95%	32.7% of CPI

Thank goodness shelter (the largest component in the index) is holding CPI down.

For more fun, see Barry Ritholtz: Look Ma, No Inflation!

by Calculated Risk on 10/13/2005 08:17:00 PM

Back in April I offered a challenge: Pick the start of the next recession. The contest is still open.

I called it: "The Mug's Game Challenge"

NOTE: Here are the original rules. Unfortunately the comments disappear after a certain amount of time, so I will not be able to feature any comments from April. But I did keep all the entries (some are probably already wrong).

Here is a simple contest to predict the start of the next recession. The rules:

1) Enter a month and a year in the comments at any time right up to the recession being announced (one entry per person). Please feel free to state your reasons. I will feature those comments for the winners.

NOTE: You do not need to enter now. I am still waiting before I make my prediction. But early entries will be rewarded. I will update the contest every month as a reminder.

2) Scoring:

A) The Starting Month: The official starting month will be determined by the NBER. This usually occurs several months after the recession starts.

B) A pick will be considered correct if it is within +/- 2 months of the NBER determination (a 5 month window centered on the month picked). It is VERY difficult to pick the exact month, and being within a couple of months is quite an achievement.

C) All correct picks will be ranked by the number of months prior to the recession that the pick was entered. As an example, say the recession starts in Oct 2005: If someone correctly picks any month August 2005 through December 2005 (+/- 2 months) during April 2005, they will be rated a "6". This rewards picking the recession early.

All correct picks will be featured when the recession is announced and ranked by earliest picks.

Earlier I offered some thoughts on leading indicators for recessions. Several people have suggested other leading indicators to me. No one wants a recession, but we might as well have some fun!

Good luck to all!

UPDATE: Prize? The winners get their names mentioned, their comments featured, the admiration of their peers, and a free subscription to Calculated Risk!

Here are the picks from April:
Aug 2005 Kirk Spencer, wharf rat
Sep 2005 Vernon Bush
Oct 2005 BE, David Bennett
Nov 2005 David Yaseen, Fernando Margueirat, steve kyle, Nguyen Khuu
Jan 2006 Yusef Asabiyah, dryfly, Frank, redfish
Feb 2006 Mish, E.Robinson
Mar 2006 Colin H, ChasHeath, Alan Greenspend, Movie Guy, F.Hagan
Apr 2006 battlepanda
May 2006 Ken Houghton, navin
Jun 2006 DOR
Aug 2006 Jason Wright
Mar 2008 dilbert dogbert
Jul 2008 jl
Nov 2008 Elaine Supkis
March, 2011 Paul
NEVER Larry Kudlow's doppelganger

UPDATE: October Picks:
Sep 2005: Alexis
Nov 2005: OldVet
Dec 2005: reason, calmo, fatbear
Jan 2006: DF
Feb 2006: Tom Marney, Stormy, Ryanonthebeach, cariboo kid, semper fubar
Mar 2006: Vader, Fester
Apr 2006: Andrew, Dean
May 2006: Michael Cain
Jun 2006: Alex Norman
Jul 2006: Dr. Z, psh, David J
Sep 2006: Prudent Investor
Oct 2006: Kevin, Nanoking
Nov 2006: Uncle Jack, Tanta
Mar 2007: eightnine2718281828mu5
Aug 2007: OEE
Sep 2007: John Bott
Oct 2007: Nicholas Weaver
Jul 2008: op
Aug 2008: Lord
NEVER: dali lama
Posters can take the same month.

by Calculated Risk on 10/13/2005 03:32:00 PM

The NC Times reports: North County median home prices decline slightly

Median prices for existing North County homes eased downward in September, according to the monthly report from the North San Diego County Association of Realtors.

Single-family detached homes sold for a median price of $620,000 in September, down 2.8 percent from August's year-to-date high of $637,750.

This is a small one month decline and may not be a trend. Perhaps of more immediate interest is the market dynamics of price reductions and rising inventories:

More sellers appear to be lowering their asking price to reflect those conditions, said Kurt Kinsey, broker/owner of Blue Pacific Realtors.

Often, these properties are being sold by "flippers," people who buy homes with an eye to selling them for a quick profit, said Kinsey, whose firm specializes in Carlsbad and Oceanside real estate. Kinsey estimated that 20 percent of sellers in Carlsbad are flippers, and perhaps half that percent in Oceanside.

"There are as many homes for resale in Carlsbad as in Oceanside, which has more than double the population," Kinsey said.

Added to this abundance of resales are new homes being sold in Carlsbad in developments such as Bressi Ranch, La Costa Greens and Calavera Hills, Kinsey said. That gives Carlsbad buyers a strong bargaining position.
...
Jerry Kalman, a Realtor in the Fallbrook/Bonsall area, reported that September was notable for "an unusually high number of homes that were repriced lower and that eventually sold for less than their original listing price."

by Calculated Risk on 10/13/2005 08:30:00 AM

UPDATE: As always on Trade Deficit / Current Account issues, Dr. Setser has some great insights (on other issues too!): Relative prices do matter

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis released the monthly trade balance report today for August:

"... total August exports of $108.2 billion and imports of $167.2 billion resulted in a goods and services deficit of $59.0 billion, compared with $58.0 billion in July, revised.

August exports were $1.8 billion more than July exports of $106.4 billion. August imports were $2.9 billion more than July imports of $164.3 Billion."

Note: all numbers are seasonally adjusted.


Click on graph for larger image.

August 2005 was 15% worse than August 2004. For the first eight months of 2005, the trade deficits is up 17% over the same period in 2004.

Imports from China set another record of $22,365 Billion. Imports from Japan were up slightly to $11,552 Billion.


The average contract price for oil set a new record of $52.65 per barrel breaking the old record of $49.03 in July.

The SA petroleum trade deficit set another record of $20.6 Billion.

With record imports from China and a record petroleum deficit, I'm surprised that the overall trade deficit wasn't a record; but it was close. The September deficit will be impacted by Katrina and most likely be another record.

by Calculated Risk on 10/13/2005 01:54:00 AM

Some more reading ...

Dr. Thoma reviews a new Fed Study: The Dallas Fed: Has the Housing Boom Increased Mortgage Risk?

CNN reports: Mortgages: Bracing for 6%

30-year mortgage rates look set to rise above 6 percent for the first time since July 2004, potentially helping set the stage for a slowdown in home sales.

And from the LA Times: Life on Financial Edge to Get Tougher

by Calculated Risk on 10/12/2005 06:21:00 PM

Economist Dr. Arturo Estrella of the NY FED provides some answers to Frequently Asked Questions about the yield curve in "The Yield Curve as a Leading Indicator"

Q. What does the evidence say, in short?

A. The difference between long-term and short-term interest rates ("the slope of the yield curve" or "the term spread") has borne a consistent negative relationship with subsequent real economic activity in the United States, with a lead time of about four to six quarters. The measures of the yield curve most frequently employed are based on differences between interest rates on Treasury securities of contrasting maturities, for instance, ten years minus three months. The measures of real activity for which predictive power has been found include GNP and GDP growth, growth in consumption, investment and industrial production, and economic recessions as dated by the National Bureau of Economic Research (NBER). The specific accuracy of these predictions depends on the particular measures employed, as well as on the estimation and prediction periods. However, the results are generally statistically significant and compare favorably with other variables employed as leading indicators. For instance, models that predict real GDP growth or recessions tend to explain 30 percent or more of the variation in the measure of real activity. See Estrella and Hardouvelis (1991). The yield curve has predicted essentially every U.S. recession since 1950 with only one "false" signal, which preceded the credit crunch and slowdown in production in 1967. There is also evidence that the predictive relationships exist in other countries, notably Germany, Canada, and the United Kingdom. See Estrella and Mishkin (1997) and Bernard and Gerlach (1998).

See the link for more FAQs. Dr. Estrella provides this graph to compare the yield curve to previous recessions.

Click on graph for larger image.

Yield curve inversions have preceded each of the last six recessions. To illustrate, the top figure shows the spread between ten‐year and three‐month Treasury securities since 1960, with shading to indicate NBER dated recessions. The bottom panel shows the probability of recession one year ahead, obtained by applying a probit model to the term spread as defined above.

The yield curve is still positive, but the spread has been decreasing. Therefore, according to Dr. Estrella, the probability of a recession is increasing.