by Calculated Risk on 2/06/2012 08:52:00 AM

Just a reminder that there are still quite a few commercial real estate (CRE) properties that are deep underwater:

From Bloomberg: Atlanta BofA Tower Auction Highlights Foreclosures (ht Mike In Long Island)

Atlanta’s 55-story Bank of America Plaza, the tallest tower in the Southeast, is set to be sold at an open outcry auction on the steps of the Fulton County Courthouse tomorrow after landlord BentleyForbes missed mortgage payments. It bought the skyscraper in 2006 for $436 million ... the 1.25 million-square-foot building has lost 54 percent of its value ...

The $363 million Bank of America Plaza loan became delinquent in December ... was appraised in March at $202 million

“We’re hitting a tremendous amount of that debt coming due,” William Yowell, a vice chairman with CBRE Group Inc. in Atlanta, said in a telephone interview. That will cause “more distressed assets that come to market this year” and may lower the price per square foot on buildings, he said.

by Calculated Risk on 2/05/2012 11:01:00 PM

From the NY Times: Deal Is Closer for a U.S. Plan on Mortgage Relief

With a deadline looming on Monday for state officials to sign onto a landmark multibillion-dollar settlement to address foreclosure abuses, the Obama administration is close to winning support from crucial states that would significantly expand the breadth of the deal.

The biggest remaining holdout, California, has returned to the negotiating table ... in the last few days, differences have narrowed in negotiations that one participant described as round the clock, with California officials in direct communication with bank representatives for the first time in months. ... Officials involved in the negotiations cautioned that broader state support could still be days away.

I expect most states (if not all) to join the settlement.

Yesterday:
• Summary for Week ending February 3rd
• Schedule for Week of February 5th

by Calculated Risk on 2/05/2012 03:06:00 PM

From the Athens News: Lengthy and difficult negotiations

A five-hour meeting between prime minister Lucas Papademos and the leaders of the three parties supporting the government ended without agreement on Sunday.

Pasok leader George Papandreou, main opposition New Democracy party leader Antonis Samaras and Popular Orthodox Rally (Laos) party leader George Karatzaferis failed to reach agreement with Papademos concerning the demands of the EU-IMF troika for private-sector wage cuts, further pension cuts, large-scale firing of public-sector staff and major downsizing of the public sector.
...
Main opposition New Democracy leader Antonis Samaras made no statements as he left the meeting but indicated the deadlock reached during the meeting during a brief statement to television cameras when he returned to ND's headquarters.

"For the first time, a negotiation is taking place. The country cannot stand more recession. I am fighting with every means to prevent this," he said, confirming that the negotiations will continue on Monday.

More from the Financial Times: Deadlock for Greek austerity talks

Yesterday:
• Summary for Week ending February 3rd
• Schedule for Week of February 5th

by Calculated Risk on 2/05/2012 10:13:00 AM

By request, here is an update to four key indicators used by the NBER for business cycle dating: GDP, Employment, Industrial production and real personal income less transfer payments.

Note: The following graphs are all constructed as a percent of the peak in each indicator. This shows when the indicator has bottomed - and when the indicator has returned to the level of the previous peak. If the indicator is at a new peak, the value is 100%.

These graphs show that several major indicators are still significantly below the pre-recession peaks.

Click on graph for larger image.

This graph is for real GDP through Q4 2011. Real GDP returned to the pre-recession in Q3 2011, and Gross Domestic Income (not shown) returned to the pre-recession peak in Q2 - GDI for Q4 will be released with the 2nd estimate of GDP. (For a discussion of GDI, see here).

At the worst point, real GDP was off 5.1% from the 2007 peak. Real GDI was off 5.7% at the trough.

Real GDP has performed better than other indicators ...

This graph shows real personal income less transfer payments as a percent of the previous peak through December.

This measure was off 10.7% at the trough.

Real personal income less transfer payments is still 4.8% below the previous peak.

This graph is for industrial production through December.

Industrial production was off over 17% at the trough, and has been one of the stronger performing sectors during the recovery.

However industrial production is still 5.4% below the pre-recession peak, and it will probably be some time before industrial production returns to pre-recession levels.

The final graph is for employment. This is similar to the graph I post every month comparing percent payroll jobs lost in several recessions.

Payroll employment is still 4.1% below the pre-recession peak.

If the economy adds 243 thousand payroll jobs per month on average (the January report), it will take another 2 years to get back to the pre-recession employment peak. And that doesn't count growth of the working age population over the last 4+ years.

Yesterday:
• Summary for Week ending February 3rd
• Schedule for Week of February 5th

by Calculated Risk on 2/04/2012 09:56:00 PM

From the Athens News: Crucial meeting of coalition partners

The crucial negotiation of the coalition political party leaders over the EC-ECB-IMF troika's ultimatums and shock measures has been set for 13:00 on Sunday.

In this new meeting of the leaders of three parties backing the interim government led by Lucas Papademos which will take place on Sunday, the prime minister is expected to present them with a document detailing the rigid positions of the troika. ... [reports are] the prime minister is thinking of resigning if the three do not manage to come to an agreement.

From Reuters: Euro zone loses patience with Greece

Euro zone finance ministers told Greece on Saturday it could not go ahead with an agreed deal to restructure privately-held debt until it guaranteed it would implement reforms needed to secure a second financing package from the euro zone and the IMF.

From the NY Times: Greek Talks at a Delicate Point, Official Says

The Greek finance minister, Evangelos Venizelos, said on Saturday that talks between the government and its foreign creditors on a second rescue deal were “on a razor’s edge,” adding that though progress had been made on some levels, crucial issues were unresolved.

“Two major, interrelated issues remain unresolved — labor relations and wages in the private sector, and the fiscal measures that must be taken to ensure we are within the target for 2012,” Mr. Venizelos said after a two-hour conference call with euro zone officials. Despite the barriers, a deal must be reached in bailout talks by Sunday night, he said.

Earlier:
• Summary for Week ending February 3rd
• Schedule for Week of February 5th

by Calculated Risk on 2/04/2012 05:47:00 PM

Earlier:
• Summary for Week ending February 3rd
• Schedule for Week of February 5th

From the Association of American Railroads (AAR): AAR Reports Gains for January Rail Traffic

The Association of American Railroads (AAR) reported that total U.S. rail carloads originated in January 2012 totaled 1,144,800, an average of 286,200 per week and up 0.1 percent over January 2011. Intermodal volume in January 2012 was 877,637 containers and trailers, up 1.7 percent over January 2011. January’s average of 219,409 intermodal units per week was the third highest ever for a January for U.S. railroads.
...
“Total rail carload traffic in January was flat compared with last year, due largely to sharp declines in coal and grain traffic,” said AAR Senior Vice President John T. Gray. “However, a number of other commodity categories — including many that have historically been much more highly correlated with GDP growth than coal and grain—saw large increases in January. That’s a sign that the underlying economy is probably stronger than you would think if you just looked at the rail traffic totals.”

Click on graph for larger image.

This graph shows U.S. average weekly rail carloads (NSA).

On a non-seasonally adjusted basis, total U.S. rail carloads in January 2012 totaled 1,144,800, an average of 286,200 per week and up 0.1% over January 2011.

Rail carload traffic collapsed in November 2008, and now, 2 1/2 years into the recovery, carload traffic is still not half way back to the pre-recession levels.

The second graph is for intermodal traffic (using intermodal or shipping containers):

Graphs reprinted with permission.

Intermodal traffic is close to the peak year in 2006.

U.S. rail intermodal volume in January 2012 was 877,637 containers and trailers, up 1.7% over January 2011. January’s average of 219,409 intermodal units per week was the third highest ever for a January for U.S. railroads.

All Current Transportation graphs

by Calculated Risk on 2/04/2012 01:21:00 PM

Earlier:
• Summary for Week ending February 3rd

This will be a light week for economic releases. The key economic release is the December trade balance report to be released on Friday.

Also on Friday Fed Chairman Ben Bernanke will speak to the National Association of Homebuilders: "Housing Markets in Transition".

Europe will be a focus, especially any announcements about Greece. Also the ECB holds a meeting on Thursday.

The mortgage settlement might be announced this coming week too.

----- Monday, Feb 6th-----
No releases scheduled.

----- Tuesday, Feb 7th -----
10:00 AM ET: Job Openings and Labor Turnover Survey for December from the BLS.

This graph shows job openings (yellow line), hires (purple), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

In general, the number of job openings (yellow) has been trending up, and were up about 7% year-over-year compared to November 2010.

10:00 AM: Testimony from Fed Chairman Ben Bernanke, "The Economic Outlook and the Federal Budget Situation", Before the Committee on the Budget, U.S. Senate (repeat of House testimony).

3:00 PM: Consumer Credit for December. The consensus is for a $7.0 billion increase in consumer credit.

----- Wednesday, Feb 8th -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index. This index was especially weak last year, although this does not include all the cash buyers.

----- Thursday, Feb 9th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for an increase to 370,000 from 367,000 last week.

10:00 AM: Monthly Wholesale Trade: Sales and Inventories for December. The consensus is for a 0.5% increase in inventories.

----- Friday, Feb 10th -----
8:30 AM: Trade Balance report for December from the Census Bureau.

Imports have been mostly moving sideways for the past six months (seasonally adjusted). Exports are well above the pre-recession peak and up 10% compared to November 2010; imports are up about 13% compared to November 2010.

The consensus is for the U.S. trade deficit to increase to $48.5 billion in December, up from from $47.8 billion in November. Export activity to Europe will be closely watched.

9:55 AM: Reuters/University of Mich Consumer Sentiment preliminary for February.

The final January Reuters / University of Michigan consumer sentiment index increased to 75.0, up from the December reading of 69.9.

The consensus is for a decrease in February to 74.3 from 75.0 in January.

12:30 PM: Speech by Fed Chairman Ben Bernanke, "Housing Markets in Transition", At the 2012 National Association of Homebuilders International Builders' Show, Orlando, Florida

by Calculated Risk on 2/04/2012 08:09:00 AM

The data released last week was solid, with the exception of house prices. Both the Case-Shiller index for November, and the CoreLogic index for December showed additional house price declines and new post bubble lows.

The employment report was well above expectations. There were 243,000 payroll jobs added in January, with 257,000 private sector jobs added. Government employment declined by 14,000 jobs. The unemployment rate fell to 8.3% from 8.5% in December. U-6, an alternate measure of labor underutilization that includes part time workers and marginally attached workers, declined to 15.1%. This remains very high - U-6 was in the 8% range in 2007.

The annual benchmark revision indicated 165,000 more payroll jobs in March 2011; the first positive benchmark revision since 2006. The BLS also adjusted the population control using the Census 2010 data, and this led to some data distortions – but overall the report was positive.

Unfortunately there are still 12.8 million Americans unemployed, and 5.5 million who have been unemployed for more than 6 months. Those are very grim unemployment numbers.

Other positive data included auto sales, and the ISM manufacturing and service indexes. Also the apartment tightness index indicated that rental markets continued to tighten (good for multifamily construction and spillover to the single family market). Overall a solid week.

Here is a summary in graphs:

• January Employment Report: 243,000 Jobs, 8.3% Unemployment Rate

This graph shows the jobs added or lost per month (excluding temporary Census jobs) since the beginning of 2008.

Click on graph for larger image.

Job growth started picking up early last year, but then the economy was hit by a series of shocks (oil price increase, tsunami in Japan, debt ceiling debate) - and now it appears job growth is picking up again.

The second graph shows the employment population ratio, the participation rate, and the unemployment rate.

The unemployment rate declined to 8.3% (red line).

The Labor Force Participation Rate declined to 63.7% in January (blue line). However the decline was related to the change in population control, and not people leaving the work force.

The Employment-Population ratio was unchanged at 58.5% in January (black line). This would have increased 0.3 with the change in population control.

The third graph shows the job losses from the start of the employment recession, in percentage terms. The dotted line is ex-Census hiring.

This shows the depth of the recent employment recession - much worst than any other post-war recession - and the relatively slow recovery due to the lingering effects of the housing bust and financial crisis.

This was a relatively strong report and well above consensus expectations.

All current Employment Graphs
• ISM Manufacturing index indicates faster expansion in January

PMI was at 54.1% in January, up from a revised 53.1% in December. The employment index was at 54.3%, down from a revised 54.8%, and new orders index was at 57.6%, up from a revised 54.8%.

From the Institute for Supply Management: January 2012 Manufacturing ISM Report On Business® Here is a long term graph of the ISM manufacturing index.

This was below expectations of 54.5%, but the consensus was before the revisions. This suggests manufacturing expanded at a faster rate in January than in December. It appears manufacturing employment expanded in January with the employment index at 54.3%.

• U.S. Light Vehicle Sales at 14.18 million annual rate in January

Based on an estimate from Autodata Corp, light vehicle sales were at a 14.18 million SAAR in January. That is up 12.1% from January 2011, and up 5.1% from the sales rate last month (13.5 million SAAR in Dec 2011).

The second graph shows light vehicle sales since the BEA started keeping data in 1967. This shows the huge collapse in sales in the 2007 recession. This also shows the impact of the tsunami and supply chain issues on sales, especially in May and June.

This was well above the consensus forecast of 13.6 million SAAR. Note: dashed line is current estimated sales rate.
All current Retail Graphs
• Case Shiller: House Prices fall to new post-bubble lows in November (seasonally adjusted)

From S&P: Home Prices Continued to Decline in November 2011 According to the S&P/Case-Shiller Home Price Indices

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 33.5% from the peak, and down 0.7% in November (SA). The Composite 10 is at a new post bubble low (Seasonally adjusted), but still above the low NSA.

The Composite 20 index is off 33.5% from the peak, and down 0.7% in November (SA). The Composite 20 is also at a new post-bubble low.

The next graph shows the price declines from the peak for each city included in S&P/Case-Shiller indices.

Prices increased (SA) in 3 of the 20 Case-Shiller cities in November seasonally adjusted (only one city increased NSA). Prices in Las Vegas are off 61.6% from the peak, and prices in Dallas only off 9.2% from the peak.

The NSA indexes are around 1% above the March 2011 lows - and these indexes will hit new lows in the next month or two since prices are falling again. Using the SA data, the Case-Shiller indexes are now at new post-bubble lows.
All House Price Graphs
• CoreLogic: House Price Index declined 1.4% in December to new post-bubble low

From CoreLogic: CoreLogic® Prices fell by 4.7 percent nationally in 2011
This graph shows the national CoreLogic HPI data since 1976. January 2000 = 100.

The index was down 1.4% in December, and is down 4.7% over the last year.

The index is off 33.7% from the peak - and is now at a new post-bubble low.

Some of this decline was seasonal (the CoreLogic index is NSA) and month-to-month price changes will probably remain negative through March 2012. Last year prices fell about 4% from December 2010 to March 2011, and there will probably be a similar decline this year.
All House Price Graphs
• NMHC Apartment Survey: Market Conditions Tighten in Recent Survey

From the National Multi Housing Council (NMHC): Apartment Industry Continues Recovery, Survey Says

This graph shows the quarterly Apartment Tightness Index. Any reading above 50 indicates tightening from the previous quarter. The index has indicated tighter market conditions for the last eight quarters and suggests falling vacancy rates and or rising rents.

This fits with the recent Reis data showing apartment vacancy rates fell in Q4 2011 to 5.2%, down from 5.6% in Q3 2011, and 9.0% at the end of 2009.

• ISM Non-Manufacturing Index indicates faster expansion in January

The January ISM Non-manufacturing index was at 56.8%, up sharply from 53.0% in December. The employment index increased in January to 57.4%, up from 49.8% in December. Note: Above 50 indicates expansion, below 50 contraction.

From the Institute for Supply Management: December 2011 Non-Manufacturing ISM Report On Business®

This graph shows the ISM non-manufacturing index (started in January 2008) and the ISM non-manufacturing employment diffusion index.

This was well above the consensus forecast of 53.3% and indicates faster expansion in January than in December.

• Weekly Initial Unemployment Claims decline to 367,000

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased this week to 375,750.

Weekly claims have been bouncing around lately - January is a period with large seasonal adjustments and that can lead to some large swings. The 4-week average of weekly claims has been moving sideways this year after trending down over the last few months of 2011.

• Other Economic Stories ...
• Restaurant Performance Index highest in almost six years in December
• A few policies I expect soon
• Fed Senior Loan Officer Survey: Lending standards "little changed", "somewhat stronger loan demand"
• From the Dallas Fed: Texas Manufacturing Activity Picks Up
• Personal Income increased 0.5% in December, Spending decreased slightly
• Fannie Mae Serious Delinquency rate declines, Freddie Mac rate increases
• Q4 2011 GDP Details: Investment in Office, Mall, and Lodging, Residential Components

by Calculated Risk on 2/03/2012 10:14:00 PM

This is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for Feb 3, 2012. (table is sortable by assets, state, etc.)

Changes and comments from surferdude808:

Quiet week for the Unofficial Bank List with no closings, one voluntary liquidation, and one addition. The list is unchanged at 958 institutions but assets increased by nearly $600 million to $389.6 billion. The First National Bank of Ordway, Ordway, CO ($45 million) underwent a voluntary liquidation in late January. The sole addition was Community West Bank, National Association, Goleta, CA ($643 million Ticker: CWBC) after the OCC issued a Consent Order against the bank. The only other change was a Prompt Corrective Action order issued by the Federal Reserve against Bank of Bartlett, Bartlett, TN ($371 million). Next week will likely be quiet as well.

Earlier Employment posts:
• January Employment Report: 243,000 Jobs, 8.3% Unemployment Rate
• Graphs: Unemployment Rate, Participation Rate, Jobs added
• Employment Summary, Part Time Workers, and Unemployed over 26 Weeks
• Construction Employment, Duration of Unemployment, Unemployment by Education and Diffusion Indexes
• All Employment Graphs

by Calculated Risk on 2/03/2012 06:23:00 PM

Some readers sent me a link to some terrible analysis that argued over 1 million people left the labor force in January. I pointed out the error. Apparently Rick Santelli at CNBC made the same mistake and reads the wrong blogs!

The Bonddad blog points out the error: No Rick Santelli and Zero Hedge, One Million People Did Not Drop Out of the Labor Force Last Month (CR note: I never read zero).

This does bring up an important point: The BLS updated the population estimates today based on the 2010 Census. I mentioned this in the preview yesterday and in the posts this morning. For whatever reason, the Census Bureau doesn't go back and revise the earlier population estimates, but they do provide analysis of the changes in several key numbers if the population estimate hadn't been changed.

Below is the table from the BLS:

With the 2010 population controls, the "not in labor force" appeared to have increased by 1.2 million in January, and the working age population jumped 1.7 million. That didn't happen last month; the numbers changed because of the new population estimate. This does suggests there are 1.2 million more people out of the labor force than we originally thought, but that is because the working age population is larger than previously estimated.

As the BLS points out, without the population change the "not in labor force" actually declined.

A couple other key points:
1) The decline in the participation rate was entirely due to the population change.
2) The employment-population ration would have increased 0.3 (good news) without the population change.

Category	Dec.-Jan. change, as published	2012 population control effect	Dec.-Jan. change, after removing the population control effect1
Civilian noninstitutional population	1,685	1,510	175
Civilian labor force	508	258	250
Participation rate	-0.3	-0.3	0
Employed	847	216	631
Employment-population ratio	0	-0.3	0.3
Unemployed	-339	42	-381
Unemployment rate	-0.2	0	-0.2
Not in labor force	1,177	1,252	-75
1This Dec.-Jan. change is calculated by subtracting the population control effect from the over-the-month change in the published seasonally adjusted estimates.

Earlier Employment posts:
• January Employment Report: 243,000 Jobs, 8.3% Unemployment Rate
• Graphs: Unemployment Rate, Participation Rate, Jobs added
• Employment Summary, Part Time Workers, and Unemployed over 26 Weeks
• Construction Employment, Duration of Unemployment, Unemployment by Education and Diffusion Indexes
• All Employment Graphs