by Calculated Risk on 3/10/2012 08:01:00 PM

A few more graphs based on the February employment report. The first graph below shows the number of total construction payroll jobs in the U.S. including both residential and non-residential since 1969.

Construction employment decreased by 13 thousand jobs in February, but construction employment has increased 98 thousand since bottoming in January 2011. Last year was the first year with an increase in construction employment since 2006, and the first with an increase in residential construction employment since 2005.

Unfortunately this graph is a combination of both residential and non-residential construction employment. The BLS only started breaking out residential construction employment fairly recently (residential specialty trade contractors in 2001).

Usually residential investment (and residential construction) leads the economy out of recession, and non-residential construction usually lags the economy. Because this graph is a blend, it masks the usual pickup in residential construction following previous recessions. Of course residential construction didn't lead the economy this time because of the large excess supply of vacant homes.

Click on graph for larger image.

Construction employment is generally increasing and construction will add to both GDP and employment growth in 2012.

As I've noted for years, there are usually two bottoms for housing following a bubble: 1) when housing starts, new home sales, and residential construction bottoms, and 2) when house prices bottom. It is pretty clear that the bottom is in for housing starts, new home sales and construction employment, and I think we are very close on prices.

Duration of Unemployment
This graph shows the duration of unemployment as a percent of the civilian labor force. The graph shows the number of unemployed in four categories: less than 5 week, 6 to 14 weeks, 15 to 26 weeks, and 27 weeks or more.

All categories are moving down (the less than 5 week category is back to normal levels). The other categories are still high.

The the long term unemployed declined to 3.5% of the labor force - this is still very high, but the lowest since August 2009.

Unemployment by Education
This graph shows the unemployment rate by four levels of education (all groups are 25 years and older).

Unfortunately this data only goes back to 1992 and only includes one previous recession (the stock / tech bust in 2001). Clearly education matters with regards to the unemployment rate - and it appears all four groups are generally trending down.

Note: This says nothing about the quality of jobs - as an example, a college graduate working at minimum wage would be considered "employed".

Diffusion Indexes
This is a little more technical. The BLS diffusion index for total private employment was at 57.9 in February and for manufacturing, the diffusion index was at 56.8. The index was revised up sharply for January - to the highest level since the '90s.

Think of this as a measure of how widespread job gains are across industries. The further from 50 (above or below), the more widespread the job losses or gains reported by the BLS. From the BLS:

Figures are the percent of industries with employment increasing plus one-half of the industries with unchanged employment, where 50 percent indicates an equal balance between industries with increasing and decreasing employment.

It appears job growth is now fairly widespread across industries.

Earlier:
• Summary for Week ending March 9th
• Schedule for Week of March 11th

Employment posts yesterday:
• February Employment Report: 227,000 Jobs, 8.3% Unemployment Rate
• Employment Summary and Discussion
• All Employment Graphs
• An older post: Percent Job Losses: Great Recession and Great Depression

by Calculated Risk on 3/10/2012 06:17:00 PM

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

Here is the unofficial problem bank list for Mar 9, 2012. (table is sortable by assets, state, etc.)

Changes and comments from surferdude808:

Several changes resulted in the Unofficial Problem Bank List having 956 institutions with assets of $383.3 billion. This week there were four removals and one addition. Last year, the list had 964 institutions with assets of $420.7 billion. The removals include the failed New City Bank, Chicago, IL ($71 million); an unassisted merger of Americantrust Federal Savings Bank, Peru, IN ($99 million); and action terminations for Macatawa Bank, Holland, MI ($1.5 billion Ticker: MCBC) and Magyar Bank, New Brunswick, NJ ($526 million Ticker: MGYR). The addition this week is Bryan Bank & Trust, Richmond, GA ($240 million Ticker: SAVB), whose affiliate The Savannah Bank, National Association, Savannah, GA is also on the list. Next week, we anticipate the OCC will release its actions through mid-February 2012.

Earlier:
• Summary for Week ending March 9th
• Schedule for Week of March 11th

by Calculated Risk on 3/10/2012 01:01:00 PM

Earlier:
• Summary for Week ending March 9th

Retail sales for February is the key report this week. For manufacturing, the March NY Fed (Empire state) and Philly Fed surveys will be released on Thursday, and the February Industrial Production and Capacity Utilization report will be released on Friday.

On prices, the February Producer Price index (PPI) will be released Thursday, and CPI will be released on Friday. Also - there is a one day FOMC meeting on Tuesday.

----- Monday, Mar 12th -----
No Releases Scheduled.

----- Tuesday, Mar 13th -----
7:30 AM: NFIB Small Business Optimism Index for February.

Click on graph for larger image in graph gallery.

This graph shows the small business optimism index since 1986. The index increased slightly to 93.9 in January from 93.8 in December. This was the fifth increase in a row after declining for six consecutive months. The consensus is for an increase to 95.0 in February.

8:30 AM: Retail Sales for February.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline). Retail Retail sales are up 20.7% from the bottom, and now 6.1% above the pre-recession peak (not inflation adjusted).

The consensus is for retail sales to increase 1.2% in February, and for retail sales ex-autos to increase 0.8%.

9:00 AM: Ceridian-UCLA Pulse of Commerce Index™ This is the diesel fuel index for February (a measure of transportation).

10:00 AM: Manufacturing and Trade: Inventories and Sales for January (Business inventories). The consensus is for 0.6% increase in inventories.

10:00 AM ET: Job Openings and Labor Turnover Survey for January 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.

Jobs openings increased in December, and the number of job openings (yellow) has generally been trending up, and are up about 15% year-over-year compared to December 2010.

10:00 AM: Regional and State Employment and Unemployment (Monthly) for January 2012

2:15 PM: FOMC Meeting Announcement. No changes are expected to interest rates.

----- Wednesday, Mar 14th -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index. This index has been weak this year, although this does not include all the cash buyers.

8:30 AM: Import and Export Prices for February. The consensus is a for a 0.6% increase in import prices.

9:00 AM: Fed Chairman Ben Bernanke speaks, "Community Banking", At the Independent Community Bankers of America National Convention and Techworld, Nashville, Tennessee. No news is expected.

----- Thursday, Mar 15th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to decrease to 355,000 from 362,000 last week.

8:30 AM: Producer Price Index for February. The consensus is for a 0.5% increase in producer prices (0.2% increase in core).

8:30 AM ET: NY Fed Empire Manufacturing Survey for March. The consensus is for a reading of 17.5, down from 19.5 in February (above zero is expansion).

10:00 AM: Philly Fed Survey for March. The consensus is for a reading of 11, up from 10.2 last month (above zero indicates expansion).

----- Friday, Mar 16th -----
8:30 AM: Consumer Price Index for February. The consensus is a 0.5% increase in prices. The consensus for core CPI to increase 0.2%.

9:15 AM ET: The Fed will release Industrial Production and Capacity Utilization for February.

This shows industrial production since 1967.

The consensus is for a 0.4% increase in Industrial Production in February, and for Capacity Utilization to increase to 78.8% (from 78.5%).

9:55 AM: Reuter's/University of Michigan's Consumer sentiment index (perliminary for March). The consensus is for a slight increase to 75.6 up from the February reading of 75.3.

by Calculated Risk on 3/10/2012 08:24:00 AM

A key story all week was the Greek debt swap that was fairly well received. See from the WSJ: Greece Defaults, and Tries to Move On. There are still many difficulties ahead for Greece, but it appears they will receive the next bailout and avoid collapse for now.

In the U.S., the February employment report was better than expected, especially considering the upward revisions to payrolls for December and January. There were 227,000 payroll jobs added in February, with 233,000 private sector jobs added, and 6,000 government jobs lost. The unemployment rate was unchanged at 8.3%. U-6, an alternate measure of labor underutilization that includes part time workers and marginally attached workers, declined to 14.9% from 15.1% in January. The change in December payroll employment was revised up from +203,000 to +223,000, and January was revised up from +243,000 to +284,000.

There are reasons to expect better job growth overall this year compared to 2011. Last year was negatively impacted by the tsunami, bad weather, high oil prices and the debt ceiling debate. We can't predict the weather, and oil prices are high again - but hopefully there will be no natural disasters this year, and also no threats of defaulting on the debt.

Plus residential investment (new home sales and housing starts) has made the bottom turn, and even with a sluggish housing recovery, residential investment will add to economic growth in 2012. Also, the employment losses from state and local governments will probably end mid-year. As the BLS noted:

Government employment was essentially unchanged in January and February. In 2011, government lost an average of 22,000 jobs per month.

Employment growth in manufacturing will probably slow in 2012, but the overall picture is improving. Unfortunately the labor market is still very weak with 12.8 million Americans unemployed and 5.4 million unemployed for more than 6 months.

Another positive report was the ISM services survey that indicated faster expansion in February. Negatives included a larger trade deficit, an increase in initial weekly unemployment claims, and - of course - falling house prices in January.

Still it was a pretty positive week. Here is a summary in graphs:

• February Employment Report: 227,000 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 was unchanged at 8.3% (red line).

The Labor Force Participation Rate increased to 63.9% in February (blue line). This is the percentage of the working age population in the labor force. The slight increase in the participation rate is a little good news. The participation rate is well below the 66% to 67% rate that was normal over the last 20 years, although most of the decline is due to demographics.

The Employment-Population ratio increased to 58.6% in February (black line).

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.
All current Employment Graphs
• ISM Non-Manufacturing Index indicates faster expansion in February

The February ISM Non-manufacturing index was at 57.3%, up from 56.8% in January. The employment index decreased in February to 55.7%, down from 57.4% in January. Note: Above 50 indicates expansion, below 50 contraction.

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

This was above the consensus forecast of 56.1% and indicates slightly faster expansion in February than in January.

• Trade Deficit increased in January to $52.6 Billion

The Department of Commerce reports: "[T]otal January exports of $180.8 billion and imports of $233.4 billion resulted in a goods and services deficit of $52.6 billion, up from $50.4 billion in December, revised." The trade deficit was above the consensus forecast of $49 billion.

This graph shows the monthly U.S. exports and imports in dollars through January 2012.

Exports are well above the pre-recession peak and up 8% compared to January 2011; imports just passed the pre-recession high and imports are up about 8% compared to January 2011.

• Weekly Initial Unemployment Claims increase to 362,000

This graph shows the 4-week moving average of weekly claims since January 2000.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims increased slightly this week to 355,000.

The 4-week moving average is near the lowest level since early 2008.

• CoreLogic: House Price Index declined 1.0% in January to new post-bubble low

From CoreLogic: CoreLogic® January Home Price Index Shows Sixth Consecutive Monthly Decline

This graph shows the national CoreLogic HPI data since 1976. January 2000 = 100.

The index was down 1.0% in January, and is down 3.1% over the last year. The index is off 34% 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 2.5% from January 2011 to March 2011, and there will probably be a similar decline this year.

• Fed's Flow of Funds: Household Real Estate Value declined $213 billion in Q4

The Federal Reserve released the Q4 2011 Flow of Funds report today: Flow of Funds.

The Fed estimated that the value of household real estate fell $213 billion to $15.96 trillion in Q4 2011. The value of household real estate has fallen $6.75 trillion from the peak - and was still falling at the end of 2011.

This graph shows household real estate assets and mortgage debt as a percent of GDP.

Mortgage debt declined by $42 billion in Q4. Mortgage debt has now declined by $777 billion from the peak. Studies suggest most of the decline in debt has been because of foreclosures (or short sales), but some of the decline is from homeowners paying down debt (sometimes so they can refinance at better rates).

• Other Economic Stories ...
• LPS: House Price Index declined 1.0% in December
• CFO Survey: U.S. Employment Growth to Accelerate
• ADP: Private Employment increased 216,000 in February
• From Jim Hamilton: Oil prices and the U.S. economy
• LPS: Foreclosure Starts and Sales increase Sharply in January

by Calculated Risk on 3/09/2012 09:18:00 PM

From housing economist Tom Lawler:

Hovnanian Enterprises, the struggling New Jersey based builder that was the 7th largest US home builder in 2010, reported that net home sales (excluding joint ventures) in the quarter ended January 31, 2012 totaled 940, up 18.7%, up from the comparable quarter a year ago. Including joint ventures, net home sales totaled 1,079, up 26.9% from a year ago. Hovnanian also reported that net home sales in February (including joint ventures) were up 37.5% from last February pace.

Home closings in the latest quarter (including joint ventures) totaled 1,012, a YOY gain of 13.5%, while Hov’s order backlog on January 31, 2012 (including joint ventures) totaled 1,730, up 28% from last January.

Chairman of the Board Ara Hovnanian said that “the spring selling season is off to a good start...,” which is consistent with other anecdotal reports from home builders.

CR note: I'm hearing similar comments from private sources.

Earlier on Employment:
• February Employment Report: 227,000 Jobs, 8.3% Unemployment Rate
• Employment Summary and Discussion
• All Employment Graphs

Note: I'm frequently asked how the Great Depression would look on the percent job losses graph, here it is: Percent Job Losses: Great Recession and Great Depression

by Calculated Risk on 3/09/2012 06:24:00 PM

“They built this City…
... Playing corporation games
Write us off the page”

Excerpted by Soylent Green is People from M.Page, B. Taupin, D. Lambert, and P.Wolf.
From the FDIC: FDIC Approves the Payout of the Insured Deposits of New City Bank, Chicago, Illinois

As of December 31, 2011, New City Bank had $71.2 million in total assets and $72.4 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $17.4 million. New City Bank is the thirteenth FDIC-insured institution to fail in the nation this year, and the second in Illinois.

No one wanted this one!

by Calculated Risk on 3/09/2012 04:27:00 PM

This morning Freddie Mac reported results for Q4 and all of 2011. Freddie reported that they acquired 98,631 REO in 2011 (Real Estate Owned via foreclosure or deed-in-lieu), down from a record 128,238 in 2010.

Fannie disposed of a record 110,175 REO, up from 101,206 in 2010. Since Freddie disposed of more REO than they acquired, Freddie's REO inventory fell 16% in 2011.

Here is a table for the last two years:

Freddie Mac REO Acquisitions and Dispositions
	2011	2010
Acquisitions	98,631	128,238
Dispositions	110,175	101,206
Net	-11,544	27,032

This has been true for most lenders - they sold more REO than they acquired in 2011 - not just Fannie, Freddie and the FHA.

The following graph shows REO inventory for Fannie, Freddie and the FHA.

Click on graph for larger image.

REO inventory for Freddie increased slightly in Q4, but declined 16% in 2011. The combined REO inventory for Fannie, Freddie and the FHA declined 28.5% in 2011.

A few comments from Freddie:

Our single-family REO acquisitions in 2011 were most significant in the states of California, Michigan, Georgia, Florida, and Arizona, which collectively represented 43% of total REO acquisitions based on the number of properties. These states collectively represented 48% of total REO acquisitions in 2010. The states with the most properties in our REO inventory as of December 31, 2011 were Michigan and California. At December 31, 2011, our REO inventory in Michigan and California comprised 12% and 10%, respectively, of total REO property inventory, based on the number of properties.

And on the REO-to-rental program:

On August 10, 2011, FHFA, in consultation with Treasury and HUD, announced a request for information seeking input on new options for sales and rentals of single-family REO properties held by Freddie Mac, Fannie Mae and FHA. According to the announcement, the objective of the request for information was to help address current and future REO inventory. The request for information solicited alternatives for maximizing value to taxpayers and increasing private investment in the housing market, including approaches that support rental and affordable housing needs. We are participating in discussions with FHFA and other agencies with respect to this initiative. It is too early to determine the impact this initiative may have on the levels of our REO property inventory, the process for disposing of REO property or our REO operations expense.

by Calculated Risk on 3/09/2012 01:52:00 PM

Catching up: The Department of Commerce reports:

[T]otal January exports of $180.8 billion and imports of $233.4 billion resulted in a goods and services deficit of $52.6 billion, up from $50.4 billion in December, revised. January exports were $2.6 billion more than
December exports of $178.2 billion. January imports were $4.7 billion more than December imports of $228.7 billion.

The trade deficit was above the consensus forecast of $49 billion.

The first graph shows the monthly U.S. exports and imports in dollars through January 2012.

Click on graph for larger image.

Both exports and imports increased in January. Imports stalled in the middle of 2011, but increased towards the end of the year (seasonally adjusted). Exports are well above the pre-recession peak and up 8% compared to January 2011; imports just passed the pre-recession high and imports are up about 8% compared to January 2011.

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

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 $103.81 per barrel in January, down slightly from December.

Both exports and imports to the European Union were up year-over-year in January, with imports increasing faster.

by Calculated Risk on 3/09/2012 10:22:00 AM

This was a solid report, especially considering the upward revisions to payrolls for December and January. The better than normal weather helped, and there is still a long ways to go for a healthy labor market with solid wage gains.

Some analysts are comparing the last three months of payroll growth to early 2011, and arguing job growth will disappoint in the coming months. I also expect some slowing in employment growth since nice weather helps the most during the winter months. But there are reasons to expect better job growth overall this year - remember 2011 was negatively impacted by the tsunami, bad weather, high oil prices and the debt ceiling debate. We can't predict the weather, and oil prices are high again - but hopefully there will be no natural disasters, and also no threats of defaulting on the debt.

Plus housing has made the bottom turn, and even with a sluggish housing recovery, residential investment will add to economic growth in 2012. Also, the employment losses from state and local governments will probably end mid-year. In the last 6 months of 2011, there were 119,000 government jobs lost. This year, in the second half, job losses will probably be close to zero. As the BLS noted:

Government employment was essentially unchanged in January and February. In 2011, government lost an average of 22,000 jobs per month.

On to the report: There were 227,000 payroll jobs added in February, with 233,000 private sector jobs added, and 6,000 government jobs lost. The unemployment rate was unchanged at 8.3%. U-6, an alternate measure of labor underutilization that includes part time workers and marginally attached workers, declined to 14.9% from 15.1% in January. This remains very high - U-6 was in the 8% range in 2007 - but this is the lowest level of U-6 since January 2009.

The participation rate increased to 63.9% (from 63.7%) and the employment population ratio increased slightly to 58.6%.

The change in December payroll employment was revised up from +203,000 to +223,000, and January was revised up from +243,000 to +284,000.

The average workweek was unchanged at 34.5 hours, and average hourly earnings increased 0.1%. "The average workweek for all employees on private nonfarm payrolls was unchanged at 34.5 hours in February. ... In February, average hourly earnings for all employees on private nonfarm payrolls rose by 3 cents, or 0.1 percent, to $23.31. Over the past 12 months, average hourly earnings have increased by 1.9 percent." This is sluggish earnings growth, and earnings are still being impacted by the large number of unemployed and marginally employed workers.

There are a total of 12.8 million Americans unemployed and 5.4 million have been unemployed for more than 6 months. Still very grim.

But overall this was a solid report.

Percent Job Losses During Recessions

Click on graph for larger image.

This graph shows the job losses from the start of the employment recession, in percentage terms - this time aligned at maximum job losses.

In the previous post, the graph showed the job losses aligned at the start of the employment recession.

Part Time for Economic Reasons

From the BLS report:

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged at 8.1 million in February. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

The number of part time workers decreased slightly in February and is still very high.

These workers are included in the alternate measure of labor underutilization (U-6) that declined to 14.9% in February from 15.1% in January.

Unemployed over 26 Weeks

This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 5.426 million workers who have been unemployed for more than 26 weeks and still want a job. This was down from 5.518 million in January. This is very high, but this is the lowest number since January 2009.

When the number of long term unemployed and part time workers (for economic reasons) starts to fall sharply, and wages increase faster than inflation, this will feel much more like a recovery.

More graphs coming ...
All Employment Graphs

by Calculated Risk on 3/09/2012 08:30:00 AM

From the BLS:

Nonfarm payroll employment rose by 227,000 in February, and the unemployment rate was unchanged at 8.3 percent, the U.S. Bureau of Labor Statistics reported today.
...
Both the labor force and employment rose in February. The civilian labor force participation rate, at 63.9 percent, and the employment-population ratio, at 58.6 percent, edged up over the month.
...
The change in total nonfarm payroll employment for December was revised from +203,000 to +223,000, and the change for January was revised from +243,000 to +284,000.

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 was unchanged at 8.3% (red line).

The Labor Force Participation Rate increased to 63.9% in February (blue line). This is the percentage of the working age population in the labor force. The slight increase in the participation rate is a little good news. The participation rate is well below the 66% to 67% rate that was normal over the last 20 years, although most of the decline is due to demographics.

The Employment-Population ratio increased to 58.6% in February (black line).

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 another solid report, especially considering the upwards revisions to payrolls for December and January. More later ...