by Calculated Risk on 8/12/2011 08:30:00 AM

On a monthly basis, retail sales increased 0.5% from June to July (seasonally adjusted, after revisions), and sales were up 8.5% from July 2010. From the Census Bureau report:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for July, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $390.4 billion, an increase of 0.5 percent from the previous month, and 8.5 percent above July 2010. ... The May to June 2011 percent change was revised from +0.1 percent to +0.3 percent.

Retail sales excluding auto also increased 0.5% in July.

Click on graph for larger image in graph gallery.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).

Retail sales seemed to stall in March, but are now moving higher again.

Retail sales are up 17.4% from the bottom, and now 3.2% above the pre-recession peak.

The second graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993.

Retail sales ex-gasoline increased by 6.9% on a YoY basis (8.5% for all retail sales).

The consensus was for retail sales to increase 0.6% in July, and for a 0.3% increase ex-auto.

The reported increase was slightly below expectations for total retail sales, however including the upward revision for June, this was a solid report.

by Calculated Risk on 8/11/2011 10:52:00 PM

Since I haven't posted on gasoline prices in some time ... from Ronald White at the LA Times: Gas prices expected to fall

"If oil remains low, the national average for gasoline will fall to $3.25 to $3.40 in the next two to three weeks as retailers slowly lower their prices to reflect their drop in cost," said Patrick DeHaan, senior energy analyst for GasBuddy.com, a website that lists retail gasoline prices.

Another price decline would be good news, but it just takes us back close to the late February and early March levels - and March is when Personal Consumption Expenditure (PCE) growth slowed, and consumer sentiment fell sharply.

Orange County Historical Gas Price Charts Provided by GasBuddy.com

by Calculated Risk on 8/11/2011 06:51:00 PM

I've been following the Sacramento market to see the change in mix over time (conventional, REOs, and short sales) in a distressed area. The Sacramento Association of REALTORS® started breaking out REOs in May 2008, and short sales in June 2009.

I'm not exactly sure what I'm looking for, but hopefully I'll know it when I see it! As some point, the number (and percent) of distressed sales will start to decline without foreclosure moratoria, homebuyer tax credits or other distortions.

The percent of distressed sales in Sacramento declined in July compared to June. Some of this decline could be seasonal, and some could be due to further foreclosure delays. In July 2011, 61.3% of all resales (single family homes and condos) were distressed sales. This is down from 65.2% in June, and down from 63.0% in July 2010.

Here are the statistics.

Click on graph for larger image in graph gallery.

This graph shows the percent of REO, short sales and conventional sales. There is a seasonal pattern for conventional sales (strong in the spring and summer), and distressed sales happen all year - so the percentage of distressed sales decreases every summer.

Note: Prior to June 2009, it is unclear if short sales were included as REO or as "conventional" - or some of both. The tax credits might have also boosted conventional sales in 2009 and early 2010.

Total sales were up 15.1% over July 2010 (sales fell last July after the tax credit expired, so a year-over-year increase was expected). Sales are down 13% compared to July 2009 and 19% compared to July 2008 - mostly due to fewer distressed sales.

Active Listing Inventory is down 21.1% from last July - we are seeing a decline in inventory in most areas. Once the foreclosure delays end, this data might be helpful in determining when the market is improving.

by Calculated Risk on 8/11/2011 04:26:00 PM

Below is a stock market graph from Doug Short, but first a few stories ...

UPDATE: Regulators Bans some short selling in Belgium, France, Italy and Spain. From European Securities and Markets Authority: ESMA promotes harmonised regulatory action on short-selling in the EU

• From the NY Times: Europe Considers Ban on Short-Selling

The European Securities and Markets Authority, a body that coordinates the European Union’s market policies, has been requesting information from member states about ... short-sales ... “We are discussing with national authorities and together we will decide whether we need coordinated action,” Victoria Powell, a spokeswoman for the authority, said Thursday.

Banning short sales always looks like desperation.

• From MarketWatch: Second-quarter GDP view cut after trade data. With the higher than expected trade deficit in June it looks like Q2 real GDP growth might have been below 1% for the 2nd straight quarter. The 2nd estimate of Q2 GDP will be released on August 26th.

• From MasterCard: Total U.S. Retail Sales for July Up 8.7% Year-over-Year

Excluding auto sales retail sales grew by 8.7% year-over-year. Retail sales are on par with the average growth of the previous 3 months, and have held onto their momentum despite concerns from other areas of the economy.

Michael McNamara, VP of Research and Analysis for MasterCard Advisors SpendingPulse, noted: “Since March, non seasonally-adjusted retail sales have topped 8% year-over-year. However, much of the 8.7 percent growth is from commodity based inflation in areas such as gasoline, food and cotton prices. While the headline year-over-year increase resembles periods of strong economic growth, when you take a closer look at the comp environment and the year-over-year inflation, it tempers the enthusiasm that would normally accompany this level of year-over-year increase.”

Retail sales for July will be released tomorrow.

Graph from Doug Short.

Click on graph for larger image.

A crazy week with four straight days of 400+ point swings for the Dow.

by Calculated Risk on 8/11/2011 03:07:00 PM

This provisional data for 2010 was released in June and shows a possible impact of the serious recession ...

From the National Center for Health Statistics: Recent Trends in Births and Fertility Rates Through 2010. The NCHS reports (provisional):

The provisional count of births in the United States for 2010 (12-month period ending December 2010) was 4,007,000. This count was 3 percent less than the number of births in 2009 (4,131,019) and 7 percent less than the all-time high of 4,316,233 births in 2007.

The provisional fertility rate for 2010 was 64.7 births per 1,000 women aged 15–44. This was 3 percent less than the 2009 preliminary rate of 66.7 and 7 percent less than the 17-year high of 69.5 in 2007.

Here is a long term graph of annual U.S. births through 2010 ...

Click on graph for larger image in new window.

Births have declined for three consecutive years, and are now 7% below the peak in 2007. I suspect certain segments of the population were under stress before the recession started - like construction workers - and even more families were in distress in 2008 through 2011. Of course it takes 9 months to have a baby, so families in distress in 2010 probably put off having babies in 2011 too.

Notice that the number of births started declining a number of years before the Great Depression started. Many families in the 1920s were under severe stress long before the economy collapsed. By 1933 births were down by almost 23% from the early '20s levels.

Of course economic distress isn't the only reason births decline - look at the huge decline following the baby boom that was driven by demographics. But it is not surprising that the number of births slow or decline during tough economic times - and that appears to be happening now.

I don't think the percentage decline in births will be anything like what happened during the Depression, but a 7% decline is pretty significant.

by Calculated Risk on 8/11/2011 12:08:00 PM

Note: This is one of the industry specific measures that I follow. I only post this once a month or so. Looking back at this data during the recession, hotel occupancy first declined in Dec 2007, and then declined sharply in the fall of 2008. Right now I don't see any special weakness in the occupancy rate that would suggest another recession.

From HotelNewsNow.com: STR: Midscale lags in weekly hotel results

Overall, the U.S. hotel industry’s occupancy rose 1.4% to 71.2%, ADR increased 3.3% to US$102.52, and RevPAR finished the week up 4.8% to US$72.99.

Note: ADR: Average Daily Rate, RevPAR: Revenue per Available Room.

The following graph shows the seasonal pattern for the hotel occupancy rate using a four week average for the occupancy rate.

Click on graph for larger image in graph gallery.

The summer leisure travel season has peaked, and the 4-week average of the occupancy rate will now start to decrease. Right now the occupancy rate is tracking just above 2008 - and well above 2009 - but still below the "normal" level.

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

by Calculated Risk on 8/11/2011 09:15:00 AM

The Department of Commerce reports:

[T]otal June exports of $170.9 billion and imports of $223.9 billion resulted in a goods and services deficit of $53.1 billion, up from $50.8 billion in May, revised. June exports were $4.1 billion less than May exports of $175.0 billion. June imports were $1.9 billion less than May imports of $225.8 billion.

The trade deficit was well above the consensus forecast of $48 billion.

The first graph shows the monthly U.S. exports and imports in dollars through June 2011.

Click on graph for larger image.

Both exports and imports decreased in June (seasonally adjusted). Exports are well above the pre-recession peak and up 13% compared to June 2010; imports are almost back to the pre-recession peak, and up about 13% compared to June 2010.

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

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.

Oil averaged $106.00 per barrel in June, down from $108.70 per barrel in May. There is a bit of a lag with prices, and import prices will fall further in July.

The trade deficit with China increased to $26.7 billion; trade with China remains a significant issue.

by Calculated Risk on 8/11/2011 08:30:00 AM

The DOL reports:

In the week ending August 6, the advance figure for seasonally adjusted initial claims was 395,000, a decrease of 7,000 from the previous week's revised figure of 402,000. The 4-week moving average was 405,000, a decrease of 3,250 from the previous week's revised average of 408,250.

The following graph shows the 4-week moving average of weekly claims since January 2000 (longer term graph in graph gallery).

Click on graph for larger image in graph gallery.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased this week to 405,000.

The 4-week average is still elevated, but has been moving down since mid-May. This is the lowest level for the 4-week average since early April and the first week under 400,000 since April 2nd.

by Calculated Risk on 8/10/2011 11:22:00 PM

• From Nelson Schwartz at the NY Times: Financial Turmoil Evokes Comparison to 2008 Crisis

Many Americans are wondering whether they are in for a repeat of the financial crisis of 2008.

The answer is a matter of fierce debate ...

The European financial crisis remains a big unknown now, but I think investors are mostly concerned with lower U.S. and global growth prospects.

• And on Europe, here is a resource for Sovereign Credit-Default Swaps (ht Steve).

• The concern today was that France might lose its AAA rating and that would impact the European bailout fund, the EFSF. From the WSJ: France Considers Further Austerity

French government pledged Wednesday to consider fresh tax rises, spending cuts and other budget measures ... French bank shares were hammered Wednesday also, with some traders citing the triple-A jitters. Shares in Société Générale were down over 18% in afternoon Paris trading and BNP Paribas shares slid over 10%.

• Here is a graph of the 10 year spread (Italy to Germany) from Bloomberg (currently 290). And for Spain to Germany (284).

• The Asian markets are mixed tonight with the Nikkei down 1.3%. The Shanghai is up 1%.

• U.S. Futures from CNBC: Pre-Market Data and Bloomberg futures: the S&P 500 is up about 17 points, and Dow futures are up about 150 points.

• Oil: WTI futures are up to $82 per barrel and Brent is up to $106.

by Calculated Risk on 8/10/2011 07:53:00 PM

From FHFA: FHFA, Treasury, HUD Seek Input on Disposition of Real Estate Owned Properties

The Federal Housing Finance Agency (FHFA), in consultation with the U.S. Department of the Treasury and Department of Housing and Urban Development (HUD), has announced a Request For Information (RFI), seeking input on new options for selling single-family real estate owned (REO) properties held by Fannie Mae and Freddie Mac (the Enterprises), and the Federal Housing Administration (FHA).

The RFI’s objective is to help address current and future REO inventory. It will explore alternatives for maximizing value to taxpayers and increasing private investment in the housing market, including approaches that support rental and affordable housing needs.

Let me repeat the graphs I posted on Monday:

The combined REO (Real Estate Owned) inventory for Fannie, Freddie and the FHA decreased to 250,982 at the end of Q2 from a record 288,341 units at the end of Q1. The "F's" REO inventory increased 6% compared to Q2 2010 (year-over-year comparison).

Click on graph for larger image in new window.

This graph shows the REO inventory for Fannie, Freddie and FHA through Q2 2011.

The REO inventory for the "Fs" increased sharply in 2010, but may have peaked in Q4 2010. However there may be a new peak when the foreclosure dam breaks.

The second graph shows REO inventory for Fannie, Freddie, FHA, Private Label Securities (PLS), and FDIC insured institutions. (economist Tom Lawler has provided some of this data).

Total REO decreased to 495,000 in Q2 from almost 550,000 in Q1.

As Tom Lawler noted: "This is NOT an estimate of total residential REO, as it excludes non-FHA government REO (VA, USDA, etc.), credit unions, finance companies, non-FDIC-insured banks and thrifts, and a few other lender categories." However this is the bulk of the REO - probably 90% or more. Rounding up the estimate (using 90%) suggests total REO is around 550,000 in Q2.

But this is only the current REO, there are also a large number of properties in the "90 days delinquent" and "in foreclosure" buckets. Here is a graph I posted on Sunday:

This graph shows the delinquent and REO buckets over time. The delinquency data is from LPS, and the REO estimates are based on work by Tom Lawler and my own calculations.

The dashed lines are "normal" historical levels for each bucket. The 30 day bucket is only slightly elevated (as of June), and the 60 day buckets is somewhat elevated. But the glaring problems are in the 90 day and in-foreclosure buckets.

There are 4.1 million seriously delinquent loans (90 day and in-foreclosure). This is about 3 million more properties than normal.

Nick Timiraos at the WSJ noted:

Together with the Federal Housing Administration, the entities owned about 250,000 homes at the end of June, or around half of all unsold, repossessed properties. Another 830,000 homes backed by the entities are in some stage of foreclosure, according to Barclays Capital.

Of those 2.1 million in the foreclosure process, less than half are related to the F's.

I'll try to add some proposal ideas soon.