by Calculated Risk on 9/10/2010 06:25:00 PM

Fading Horizon
It's reach, overextended.
Federal eclipse.
by Soylent Green is People
From the FDIC: Bank of the Ozarks, Little Rock, Arkansas, Assumes All of the Deposits of Horizon Bank, Bradenton, Florida

As of June 30, 2010, Horizon Bank had approximately $187.8 million in total assets and $164.6 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $58.9 million. ... Horizon Bank is the 119th FDIC-insured institution to fail in the nation this year, and the twenty-third in Florida. The last FDIC-insured institution closed in the state was Community National Bank at Bartow, Bartow, on August 20, 2010.

After taking two weeks off, the FDIC is back in action.

by Calculated Risk on 9/10/2010 03:08:00 PM

Hotel occupancy is one of several industry specific indicators I follow ...

From HotelNewsNow.com: STR: US hotel results week ending 4 Sept. 2010

In year-over-year comparisons, occupancy increased 7.5 percent to 57.4 percent, average daily rate was up 2.1 percent to US$94.37, and revenue per available room rose 9.7 percent to US$54.16.

This was the 13th consecutive week the U.S. reported overall ADR increases. Before this trend emerged, ADR in decreased 74 of the past 76 weeks.

The following graph shows the four week moving average for the occupancy rate by week for 2008, 2009 and 2010 (and a median for 2000 through 2007).

Click on graph for larger image in new window.

Notes: the scale doesn't start at zero to better show the change. The graph shows the 4-week average, not the weekly occupancy rate.

On a 4-week basis, occupancy is up 8.1% compared to last year (the worst year since the Great Depression) and 3.5% below the median for 2000 through 2007.

The occupancy rate is just above the levels of 2008 - but 2008 was a tough year for the hotel industry!

Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com

by Calculated Risk on 9/10/2010 01:25:00 PM

Yesterday I posted a couple of graphs of government payroll employment since 1976 as a response to some comments to Menzie Chinn's post at Econbrowser: The "Ever-Expanding" Government Sector, Illustrated

There were a few questions ... (Please remember I was just answering some question to Menzie's post - not trying to start a huge debate - but I do think data helps to define the issues.)

Q: Does this include active duty military?

A: No. The payroll data is from the BLS and is for civilian employment only.

Q: Does this include government contractors?

A: Government contractors are private employers. The headcount would be included in the BLS report, but not as government employees.

Q: The graphs show that Federal government payroll employment (ex-military) has been declining over the last 35 years - and state and local has been mostly flat. But what about the pay (including benefits)?

A: I don't have that data, but the following graph is based on BEA data and shows the Federal (and defense spending) and state and local spending as a percent of GDP. But this doesn't include any unfunded future liabilities.

Click on graph for larger image.

There has been a surge in defense spending, but Federal spending ex-defense and state and local spending has been fairly flat (but as I noted above, underfunded future liabilities - like state and local underfunded pension plans - don't show up).

I'm guessing the next question will be how the Federal stimulus spending shows up in the BEA reports. So here is the answer from the BEA:

BEA tracks the portion of federal government sector receipts and expenditures in the national income and product accounts that are affected by the provisions of the ARRA. Many of the ARRA-funded transactions—such as grants, transfers, and tax cuts—are not directly included in gross domestic product (GDP), because GDP only includes government spending on goods and services. However, these transactions affect GDP indirectly by providing resources to households, businesses, and state and local governments to fund personal consumption expenditures, business investment, and state and local government spending.

Now back to the economy.

by Calculated Risk on 9/10/2010 10:07:00 AM

From the Census Bureau:

Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, were $405.0 billion at the end of July, up 1.3 percent ...

The July inventories/sales ratio for merchant wholesalers, except manufacturers’ sales branches and offices, based on seasonally adjusted data, was 1.16.

Click on graph for larger image in new window.

Usually we focus on Manufacturers' Inventories and Manufacturers' inventory-to-sales ratio, but the wholesale inventory report shows the same thing - the inventory adjustment is over.

This increase could be spun two ways. First from CNBC:

U.S. wholesale inventories surged by the largest amount in two years in July ... in a sign firms were anticipating enough demand to boost stock this summer.

That sounds like good news.

The alternative view (my view) is that inventories are now a little too high - and that wholesalers will now cut back a little on orders.

by Calculated Risk on 9/10/2010 08:44:00 AM

From the WSJ: Goolsbee to Lead Council of Economic Advisers

President Barack Obama will name Austan Goolsbee, a longtime adviser and an architect of his campaign's economic message, to be chairman of the White House Council of Economic Advisers at a White House press conference Friday, an administration official said Thursday night.

Tanta, my former co-blogger, once wrote about Goolsbee (back in 2007): Dr. Goolsbee: I’ll Stop Impersonating an Economist If You Quit Underwriting Mortgage Loans

Tanta's post was very funny - but it isn't funny that Goolsbee demonstrated a lack of understanding about the housing market.

by Calculated Risk on 9/09/2010 10:27:00 PM

David Lazarus has an interesting foreclosure story in the LA Times: Suddenly, their house is taken over

A few details:

The couple fell behind on their mortgage payments (he works in construction). Wells Fargo put them in a HAMP three month trial modification program in December, and they made all their payments.

After the three months were up, Ellen Kahara said, they were told by Wells that their case was still under review and that they should keep making the $1,400 payments. They did.

The bank continued requesting paperwork as part of its review process. ... The Kaharas received a letter from Wells dated Aug. 11 saying that their application for a permanent loan modification had been rejected. The letter said the Kaharas would have 30 days to discuss other options available to them.

"No foreclosure sale will be conducted and you will not lose your home during this 30-day period," the letter said.

On August 18th there was a knock on the door - it was the new owner who had bought the home at foreclosure!

Obviously Wells Fargo made a huge mistake with the foreclosure, but perhaps just as outrageous is how they strung the couple along for months - collecting seven or eight monthly payments - and then finally denied the permanent modification when they were ready to foreclose.

by Calculated Risk on 9/09/2010 06:44:00 PM

From Ethan Harris, Bank of America North American Economist, and others, Growth recession, Sept 3rd:

"[F]or most of 2010 and 2011, employment growth is not expected to keep up with the rise in the labor force, which means the unemployment rate heads north. We expect a steady increase to 10.1% by the second quarter with a slow fall slightly below 10.0% by the end of 2011."

From Ed McKelvey, Goldman Sachs senior economist today:

"[W]e expect payroll gains to slow to 25,000 per month (ex Census workers) and the jobless rate to drift up to 10% over the next half year."

With growth slowing in the 2nd half (and into 2011), this means the unemployment rate will probably tick up too (unless the participation rate falls further). I've been expecting the unemployment rate to stay elevated, and probably increase further - and the main reason is the same as for the BofA and Goldman analysts: the general slowing economy.

by Calculated Risk on 9/09/2010 02:29:00 PM

Here is a look at European bond spreads from the Atlanta Fed weekly Financial Highlights released today (graph as of Sept 7th):

Click on graph for larger image in new window.

From the Atlanta Fed:

Peripheral European bond spreads (over German bonds) have risen since the August FOMC meeting.

Irish and Portuguese bond spreads are currently at all-time highs, while the spread for Greek bonds remains extremely elevated.

Since the August FOMC meeting, the 10-year Greece-to-German bond spread has risen by 146 basis points (bps) ... through September 7. Similarly, with other European peripherals’ spreads, Portugal’s is higher by 99 bps during the period, and Spain’s is up by 20 bps.

Note: The Atlanta Fed data is a couple days old. Nemo has links to the current data on the sidebar of his site. The bond spreads have eased slightly over the last couple of days.

Note: A big story today was the report that Deutsche Bank is seeking to raise 9 billion euros.

by Calculated Risk on 9/09/2010 12:23:00 PM

Menzie Chinn at Econbrowser posted a graph of total government employment over the last decade: The "Ever-Expanding" Government Sector, Illustrated

In response to the comments to his post, here are a couple of additional graphs:

Click on graph for larger image.

This graph shows federal, state, and local government employment as a percent of the civilian noninstitutional population since 1976 (all data from the BLS).

Federal government employment has decreased over the last 35 years (mostly in the 1990s), state government employment has been flat, and local government employment has increased.

Note the small spikes very 10 years. That is the impact of the decennial census.

The second graph shows government employment excluding education as a percent of the civilian noninstitutional.

The percent of federal and state government employment (ex-education) have all declined. Local government employment has been steady - so overall government employment (ex-education) as a percent of the civilian population is down over the last 35 years.

by Calculated Risk on 9/09/2010 09:11:00 AM

The Census Bureau reports:

[T]otal July exports of $153.3 billion and imports of $196.1 billion resulted in a goods and services deficit of $42.8 billion, down from $49.8 billion in June, revised.

Click on graph for larger image.

The first graph shows the monthly U.S. exports and imports in dollars through June 2010.

Although imports declined in July, imports have been increasing much faster than exports.

The second graph shows the U.S. trade deficit, with and without petroleum, through July.

The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

The decrease in the deficit in July was across the board, although the oil deficit only declined slightly. And the trade gap with China declined slightly to $25.92 billion from $26.15 billion in June - essentially unchanged.

This is the 2nd largest monthly trade deficit since the 2008 collapse in trade.