by Calculated Risk on 4/16/2012 04:03:00 PM

Catching up: This was released earlier from the NY Fed: April's Empire State Manufacturing Survey indicates manufacturing activity in New York State improved modestly

April’s Empire State Manufacturing Survey indicates that manufacturing activity in New York State improved modestly. Although the general business conditions index fell fourteen points, it remained positive at 6.6. The new orders and shipments indexes also remained positive, but showed only a small increase in orders and shipments. The prices paid index inched downward but remained high, and the prices received index climbed six points to 19.3. The index for number of employees rose to its highest level in nearly a year, indicating a significant increase in employment levels, while the average workweek index fell to a level that indicated only a small increase in hours worked. Future indexes remained quite positive, suggesting a strong and persistent degree of optimism about the six month outlook.

The general business index was down sharply to 6.56 from 20.21 in March, and was significantly below the consensus forecast of 18.

The employment index was up to 19.28 from 13.58 in March.

by Calculated Risk on 4/16/2012 12:24:00 PM

From BuildFax:

Residential remodels authorized by building permits in the United States in February were at a seasonally-adjusted annual rate of 2,894,000. This is 3 percent above the revised January rate of 2,811,000 and is 23 percent above the February 2011 estimate of 2,362,000.

"February 2012 is the first month over the past twelve to show significant increases in residential remodeling activity across all U.S. regions," said Joe Emison, Vice President of Research and Development at BuildFax.

The BuildFax Remodeling Index (BFRI) is based on construction permits for residential remodeling projects filed with local building departments across the country. The index estimates the number of properties permitted. The national and regional indexes are based upon a subset of representative building departments in the U.S. and population estimates from the U.S. Census. The BFRI is seasonally-adjusted using the X12 procedure.

Click on graph for larger image.

This graph shows the Remodeling Index since January 2000 on a seasonally adjusted basis.

Remodeling is below the peak levels of the housing boom - with all the equity extraction - but up 25% from the bottom in May 2009.

Note: Permits are not adjusted by value, so this doesn't mean there is more money being spent, just more permit activity. Also some smaller remodeling projects are done without permits and the index will miss that activity.

The second graph shows the regional indexes. From BuildFax:

Seasonally-adjusted annual rates of remodeling across the country in February 2012 are estimated as follows: Northeast, 627,000 (up 24% from January and up 33% from February 2011); South, 1,194,000 (up 3% from January and up 25% from February 2011); Midwest, 516,000 (up 4% from January and up 22% from February 2011); West, 830,000 (up 9% from January and up 21% from February 2011).

Some of the increase in February could be weather related (the index is seasonally adjusted, and the weather in February was warmer than normal). This might especially be true in the Northeast.

For overall residential investment, multi-family construction and home improvement have already picked up, and it appears single family construction will increase in 2012.

by Calculated Risk on 4/16/2012 10:00:00 AM

The National Association of Home Builders (NAHB) reports the housing market index (HMI) declined 3 points in April to 25. Any number under 50 indicates that more builders view sales conditions as poor than good.

From the NAHB: Builder Confidence Slips Three Notches in April

Builder confidence in the market for newly built, single-family homes declined for the first time in seven months this April, sliding three notches to 25 on the National Association of Home Builders/Wells Fargo Housing Market Index, released today. The decline brings the index back to where it was in January, which was the highest level since 2007.

"Although builders in many markets are noting increased interest among potential buyers, consumers are still very hesitant to go forward with a purchase, and our members are realigning their expectations somewhat until they see more actual signed sales contracts,” noted Barry Rutenberg, chairman of the National Association of Home Builders (NAHB) and a home builder from Gainesville, Fla.

“What we’re seeing is essentially a pause in what had been a fairly rapid build-up in builder confidence that started last September,” said NAHB Chief Economist David Crowe. “This is partly because interest expressed by buyers in the past few months has yet to translate into expected sales activity, but is also reflective of the ongoing challenges that are slowing the housing recovery – particularly tight credit conditions for builders and buyers, competition from foreclosures and problems with obtaining accurate appraisals.”
...
Each of the index’s components registered declines in April. The component gauging current sales conditions and the component gauging sales expectations in the next six months each fell three points, to 26 and 32, respectively, while the component gauging traffic of prospective buyers fell four points to 18. (Note, the overall index and each of its components are seasonally adjusted.)

Regionally, the HMI results were somewhat mixed in April, with the Northeast posting a four-point gain to 29 (its highest level since May of 2010), the West posting no change at 32, the South posting a three-point decline to 24 and the Midwest posting an eight-point decline to 23.

Click on graph for larger image.

This graph compares the NAHB HMI (left scale) with single family housing starts (right scale). This includes the April release for the HMI and the February data for starts (March housing starts will be released tomorrow).

Housing Investment and Construction

by Calculated Risk on 4/16/2012 08:30:00 AM

On a monthly basis, retail sales were up 0.8% from February to March (seasonally adjusted), and sales were up 6.5% from March 2011. From the Census Bureau report:

The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for March, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $411.1 billion, an increase of 0.8 percent (±0.5%) from the previous month and 6.5 percent (±0.7%) above March 2011. ... The January to February 2012 percent change was revised from 1.1 percent (±0.5) to 1.0 percent(±0.2%).

Ex-autos, retail sales increased 0.8% in March.

Click on graph for larger image.

Sales for February were revised down from a 1.1% increase to a 1.0% increase.

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

Retail sales are up 23.6% from the bottom, and now 8.6% above the pre-recession peak (not inflation adjusted)

The second graph shows the same data since 2006 (to show the recent changes). Excluding gasoline, retail sales are up 19.6% from the bottom, and now 7.7% above the pre-recession peak (not inflation adjusted).

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

Retail sales ex-gasoline increased by 6.3% on a YoY basis (6.6% for all retail sales). Retail sales ex-gasoline increased 0.7% in March.

This was above the consensus forecast for retail sales of a 0.3% increase in March, and above the consensus for a 0.6% increase ex-auto.



All current retail sales graphs

by Calculated Risk on 4/15/2012 06:35:00 PM

From the Financial Times: Sarkozy breaks silence over ECB role

“Europe must purge its debts, it has no choice. But between deflation and growth, it has no more choice. If Europe chooses deflation it will die. We, the French, will open the debate on the role of the central bank in the support of growth.” [Sarkozy said]
excerpt with permission

Of course, while most of Europe is worried about deflation, Germany is worried about inflation.

And from the NY Times: In Spain and Italy, Signs of a Lingering Crisis for Europe

Neither Spain nor Italy seems a good candidate for meeting the deficit-reduction targets they have agreed to with the European Union, especially if the downturn deepens.
...
While the austerity debate simmers, a more pressing concern is efforts by Italy and Spain to raise financing for government debt they will need to roll over this year. Italy has so far raised only a little more than one-third of the estimated 215 billion euros ($283 billion) it will need this year, according to Reuters calculations. Spain is about half of the way to its goal, the economy minister, Luis de Guindos, said last Tuesday. According to the 2012 budget, the Spanish treasury plans gross issuance of 186 billion euros of debt this year.

The European Central Bank relieved a great deal of pressure with two rounds of cheap, three-year loans to banks in December and February that pumped 1 trillion euros ($1.3 trillion) into the region’s banking system. Many banks, especially in the southern countries like Spain and Italy, turned around and used that money to buy their government’s debt.

That debt-buying is now tapering off, said Guntram Wolff, deputy director at Bruegel, a research organization in Brussels. That raises the question of who might step in to finance these governments. “Investors are starting to express big doubts,” Mr. Wolff said.

And on Greece: the election is scheduled for May 6th, and the smaller parties will probably do very well.

Yesterday:
• Summary for Week Ending April 13th
• Schedule for Week of April 15th

by Calculated Risk on 4/15/2012 02:39:00 PM

From Paul Krugman: Insane in Spain

"the euro crisis is [now] ... centered on Spain — which in a way is a good thing, because now the essential craziness of the orthodox German-inspired diagnosis of the crisis is on full display.

For this is really, really not about fiscal irresponsibility. Just as a reminder, on the eve of the crisis Spain seemed to be a fiscal paragon:"

	Spain	Germany
Budget Balance, % of GDP, 2007	+1.9%	+0.3%
Net Debt, % of GDP, 2007	27%	50%

"What happened to Spain was a housing bubble — fueled, to an important degree, by lending from German banks — that burst, taking the economy down with it. ...

And the policy response is supposed to be even more austerity, with the European Central Bank, natch, obsessing over inflation ...

I’m really starting to think that we’re heading for a crackup of the whole system."

The German argument falls apart when we look at Spain. Instead of focusing on government spending, we could look at capital flows. Oh well.

The ECB's LTRO has bought a little bit of time, but if the policymakers stay focused on austerity, they will fail. A key European analyst pointed out last week that essentially all recent sovereign issuance in the periphery has been purchased by in-country banks, and that was related to the LTRO from the ECB. In other words, there is no private market for peripheral sovereign debt. The key analyst concluded: "The EMU (Economic and Monetary Union) is over".

by Calculated Risk on 4/15/2012 09:44:00 AM

Long term readers will remember the quote about "neutron loans" from mortgage banker Lou Barnes in 2007:

“All of the old-timers knew that subprime mortgages were what we called neutron loans — they killed the people and left the houses,” said Louis S. Barnes, 58, a partner at Boulder West, a mortgage banking firm in Lafayette, Colo.

Here is what Lou Barnes wrote on Friday on housing in Boulder, Colorado:

"What would the turn look like, if really underway? My own back yard has turned in just the last 60 days. The Front Range of Colorado never had a housing bubble: we danced with the Technology Fairy 1999-2001, afterward built too many houses, and made too many stupid loans, but all of that was over by 2004 when we led the nation in foreclosures. Long time ago. We have the 6th-lowest level of mortgage delinquency of any state in the US. Our rental vacancy rate spiked to 12%, now below 5% for the first time since '99 (0% in Boulder!). Rents are moving up quickly. State population in the last dozen years has risen from 4.1 million to 5 million, and we're short of land to build (you could drop Rhode Island in here and never find it, but we are maniacs for "open space" reservations). Building permits have been off 85% since '07. Unemployment is down to 7%-ish. Our listed inventory of homes evaporated by 40% since last year. Buyers have lost their fear, the only problem finding something to show them.

Does your local market look like that? Mister housing-has-bottomed? Eh?

As perfect as our set-up, are prices rising? In rich, government- and tech-payrolled, land-starved Boulder County, yes. At last. Enough to unlock sellers? Ummmm... later.

Two philosophers have remarked incisively on speed. Stephen Hawking: "Time is what keeps everything from happening at once." Then, Satchel Paige's description of Cool Papa Bell: "He was so fast he could flip off the light switch and be in bed before the room got dark. One time he hit a line drive right past my ear. I turned around and saw the ball hit his ass just as he slid into second."

Housing is the polar opposite of Cool Papa Bell.

Here in Colorado, the 1980s were tougher than this patch, and in Boulder we had all the same, lovely conditions as above by the spring of 1990, and the first, timid price increases in nine years. It then took 18 months for prices to begin to rise on the far side of town. Bottom is one thing, better another, recovery something else entirely.

Yes, my local market looks like that.

As Barnes notes, a bottom for prices is one thing, a recovery in prices "something else entirely" - and I doubt prices will rise significantly any time soon. However, in more and more areas, it appears prices have bottomed, and buyers have "lost their fear".

by Calculated Risk on 4/14/2012 08:27:00 PM

The causes of the Great Recession were similar to the Great Depression - as opposed to most post war recessions that were caused by Fed tightening to slow inflation - and I'm frequently asked if we could compare the percent job losses during the two periods. Unfortunately there is very little data for the Great Depression.

Back in February I posted a graph based on some rough annual data.

On Friday, Treasury released a slide deck titled Financial Crisis Response In Charts. One of the charts shows the percentage jobs lost in the current recession compared to the Great Depression.

Click on graph for larger image.

This graph compares the job losses from the start of the employment recession, in percentage terms for the Great Depression, the 2007 recession, and the average for several recent recession following financial crisis.

Although the 2007 recession is much worse than any other post-war recession, the employment impact was much less than during the Depression. Note the second dip during the Depression - that was in 1937 and the result of austerity measures.

Earlier:
• Summary for Week Ending April 13th
• Schedule for Week of April 15th

by Calculated Risk on 4/14/2012 04:40:00 PM

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

Here is the unofficial problem bank list for April 13, 2012. (table is sortable by assets, state, etc.)

Changes and comments from surferdude808:

We thought there was a chance for the OCC to release its actions through mid-March but we will have to wait until next week for that press release. As a result, it was quiet week for the Unofficial Problem Bank List with no failures, three removals, and one addition. These changes leave the list at 944 institutions with assets of $375.3 billion. A year-ago, the list held 978 institutions with assets of $429.4 billion. The three removals are for action termination and include Los Alamos National Bank, Los Alamos, NM ($1.5 billion); Empire National Bank, Islandia, NY ($340 million Ticker: EMPK); and Mountain Pacific Bank, Everett, WA ($118 million). The addition was Parke Bank, Sewell, NJ ($790 million Ticker: PKBK).

Earlier:
• Summary for Week Ending April 13th

by Calculated Risk on 4/14/2012 01:05:00 PM

Earlier:
• Summary for Week Ending April 13th

There are three key housing reports that will be released this week: April homebuilder confidence on Monday, March housing starts on Tuesday, and March existing home sales on Thursday.

Another key report is March retail sales. For manufacturing, the April NY Fed (Empire state) and Philly Fed surveys, and the March Industrial Production and Capacity Utilization report will be released this week.

The AIA's Architecture Billings Index for March will also be released on Wednesday.

All week: 2012 Spring Meetings of the International Monetary Fund and the World Bank Group in Washington, D.C.

----- Monday, Apr 16th -----
8:30 AM: Retail Sales for March.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline). Retail sales are up 22.6% from the bottom, and now 7.8% above the pre-recession peak (not inflation adjusted).

The consensus is for retail sales to increase 0.3% in March, and for retail sales ex-autos to increase 0.6%.

8:30 AM ET: NY Fed Empire Manufacturing Survey for April. The consensus is for a reading of 18.0, down from 20.2 in March (above zero is expansion).

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

10:00 AM: The April NAHB homebuilder survey. The consensus is for a reading of 29, up slightly from 28 in March. Although this index has been increasing lately, any number below 50 still indicates that more builders view sales conditions as poor than good.

----- Tuesday, Apr 17th -----
8:30 AM: Housing Starts for March.

This shows the huge collapse following the housing bubble, and that total housing starts have been increasing a little lately after mostly moving sideways for about two years and a half years. Housing starts might have been boosted by the favorable weather lately.

The consensus is for total housing starts to increase slightly to 700,000 (SAAR) in March from 698,000 in February.

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

This shows industrial production since 1967.

The consensus is for a 0.3% increase in Industrial Production in March, and for Capacity Utilization to decrease to 78.6% (from 78.7%).

----- Wednesday, Apr 18th -----
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.

During the day: The AIA's Architecture Billings Index for March (a leading indicator for commercial real estate).

----- Thursday, Apr 19th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to decrease to 365,000 after increasing to 380,000 last week.

10:00 AM: Existing Home Sales for March from the National Association of Realtors (NAR).

The consensus is for sales of 4.62 million on seasonally adjusted annual rate basis.

A key will be inventory and months-of-supply.

10:00 AM: Philly Fed Survey for April. The consensus is for a reading of 12.0, down from 12.5 last month (above zero indicates expansion).

10:00 AM: Conference Board Leading Indicators for March. The consensus is for a 0.2% increase in this index.

----- Friday, Apr 20th -----
10:00 AM: Regional and State Employment and Unemployment (Monthly) for March 2012