by Calculated Risk on 5/06/2013 09:47:00 PM

The recent controversy surrounding historian Niall Ferguson reminds me of this post some time ago by Invictus: Open Mouth, Insert Foot: Going Viral?

This post [is] about [Ferguson's] recent Bloomberg TV interview with Erik Schatzker and Sara Eisen. And, in particular, one very specific part of that interview where Ferguson makes what is well beyond what I could even charitably refer to as a rookie mistake.
...
At 3:55 into the clip, Sara asks Ferguson about the private sector job gains versus the massive public sector job losses we’ve seen under Obama. ...

Here’s what, by my transcription, Ferguson had to say (emphasis mine):

Well, that’s not really a part of the argument I made in the piece. The point I made in the piece was that the stimulus had a very short-term effect, which is very clear if you look , for example, at the Federal employment numbers there’s a huge spike in early 2010 and then it falls back down.

Niall, babe, I got one word for you: Census (pdf).

So basically Ferguson thought incorrectly the short term hiring for Census 2010 was related to the stimulus (back then I was reporting the jobs report using both the headline number and the ex-Census number). Very amusing ...

Tuesday economic releases:
• At 10:00 AM ET, the BLS will release the Job Openings and Labor Turnover Survey for March. The number of job openings has generally been trending up, and openings were up 11% year-over-year in February.  That was most job openings since May 2008. 

• Also at 10:00 AM, the Trulia Price Rent Monitors for April. This is the index from Trulia that uses asking house prices adjusted both for the mix of homes listed for sale and for seasonal factors.

• At 3:00 PM, the Fed will release Consumer Credit for March. The consensus is for credit to increase $15.0 billion in March.

by Calculated Risk on 5/06/2013 02:50:00 PM

From the Federal Reserve: The April 2013 Senior Loan Officer Opinion Survey on Bank Lending Practices

The April 2013 Senior Loan Officer Opinion Survey on Bank Lending Practices addressed changes in the supply of, and demand for, bank loans to businesses and households over the past three months. This summary is based on responses from 68 domestic banks and 21 U.S. branches and agencies of foreign banks. In the April survey, domestic banks, on balance, reported having eased their lending standards and having experienced stronger demand in several loan categories over the past three months.

The survey results generally indicated that banks’ policies regarding lending to businesses eased over the past three months and demand increased, on balance. In particular, a relatively large fraction of domestic respondents reported having eased standards on C&I loans, and moderate to large net fractions of such respondents reportedly eased many terms on C&I loans to firms of all sizes. ...

On the household side, the survey results were more mixed. On balance, a few domestic banks reported having eased standards on prime residential mortgages over the past three months. For the fifth consecutive survey, respondents reported that demand for prime residential mortgage loans had strengthened on net. A small net fraction of respondents reported that they had eased standards on credit card and auto loans over the past three months, while standards on other consumer loans had remained about unchanged. On balance, banks reported having eased selected terms on auto loans, but terms on credit card and other consumer loans were reportedly little changed. emphasis added

In general this survey indicates lending standards are still tight, but some banks are loosening a little - and there is also increasing demand for certain loans. Here are some graphs from the Fed of lending standards and loan demand over time for various categories.

by Calculated Risk on 5/06/2013 12:07:00 PM

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 some major indicators are still below the pre-recession peaks.

Click on graph for larger image.

This graph is for real GDP through Q1 2013.

Real GDP returned to the pre-recession peak in Q4 2011, and has hit new post-recession highs for six consecutive quarters.

At the worst point - in Q2 2009 - real GDP was off 4.7% from the 2007 peak.

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

This measure was off 11.2% at the trough in October 2009.

Real personal income less transfer payments returned to the pre-recession peak in December, but that was due to a one time surge in income as some high income earners accelerated earnings to avoid higher taxes in 2013.   Real personal income less transfer payments declined sharply in January, and were 3.3% below the previous peak in March.

Real personal income less transfer payments might be the last major indicator to return to pre-recession levels (excluding the spike last December).

The third graph is for industrial production through March 2013.

Industrial production was off over 17% at the trough in June 2009, and has been one of the stronger performing sectors during the recovery.

However industrial production is still 1.3% below the pre-recession peak.  This indicator will probably return to the pre-recession peak in 2013.

The final graph is for employment and is through April 2013.  This is similar to the graph I post every month comparing percent payroll jobs lost in several recessions.

Payroll employment is still 1.9% below the pre-recession peak and will probably be back to pre-recession levels in 2014.

All of these indicators collapsed in 2008 and early 2009, and only real GDP is back to the pre-recession peak (personal income returned to the previous peak in December due to a one time increase in income). 

by Calculated Risk on 5/06/2013 08:38:00 AM

LPS released their Mortgage Monitor report for March today. According to LPS, 6.59% of mortgages were delinquent in March, down from 6.80% in February.

LPS reports that 3.37% of mortgages were in the foreclosure process, down from 4.19% in March 2012.

This gives a total of 9.96% delinquent or in foreclosure. It breaks down as:

• 1,842,000 properties that are 30 or more days, and less than 90 days past due, but not in foreclosure.
• 1,466,000 properties that are 90 or more days delinquent, but not in foreclosure.
• 1,689,000 loans in foreclosure process.

For a total of ​​4,997,000 loans delinquent or in foreclosure in March. This is down from 5,589,000 in March 2012.

Click on graph for larger image.

The first graph from LPS shows the number of non-current loans by delinquency bucket (30-60 days, 60-90 days, 90+ days, and in-foreclosure). The number of problem loans fell below 5 million for the first time since 2008.

Also note that short term delinquencies are close to normal - and LPS reports new problem loans are at the lowest level in 6 years - but there still 3 million loans that are 90+ days delinquent or in-foreclosure. This is still very high.

From LPS:

The March Mortgage Monitor report released by Lender Processing Services found that new problem loan rates (seriously delinquent mortgages that were current six months ago) have fallen below 1 percent for the first time since 2007. At 0.84 percent, the March new problem loan rate is approaching pre-crisis levels, and nearing the conditions of 2000-2004 when the rate averaged 0.55 percent. However, as LPS Applied Analytics Senior Vice President Herb Blecher explained, a borrower’s equity position is still a key indicator of his or her propensity to default.

“There has always been a clear correlation between higher levels of negative equity and new problem loan rates,” Blecher said. “Looking at the March data, we see that borrowers with equity are actually outperforming the national average -- at 0.6 percent, this group is quite close to pre-crisis norms. The further underwater a borrower gets, the higher those problem rates rise. Borrowers with loan-to-value (LTV) ratios of just 100-110 percent are actually defaulting at more than twice the national average. For those 50 percent or more underwater, we see new problem rates of 4 percent.

“Still, the overall equity trend has been a very positive one,” Blecher continued. “LPS’ latest data shows that the share of loans with LTVs greater than 100 percent has fallen 41 percent from a year ago. In total, there were approximately 9 million such loans, or about 18 percent of active mortgages. Some states, including the so-called ‘sand states’ (Arizona, Florida, Nevada and California), are still well above the national level, at an average 28 percent, but they, too, have seen improvement over the last year, with negative equity dropping over 40 percent across those four states since January 2012.”

There is much more in the mortgage monitor.

by Calculated Risk on 5/05/2013 09:35:00 PM

Monday economic releases:
• Early, the LPS March Mortgage Monitor report. This is a monthly report of mortgage delinquencies and other mortgage data.

• 2:00 PM ET, the April 2013 Senior Loan Officer Opinion Survey on Bank Lending Practices from the Federal Reserve. This might show some slight loosening in lending standards.

From CNBC: Pre-Market Data and Bloomberg futures: the S&P and Dow futures are mostly flat (fair value).

Oil prices were up over the last week with WTI futures at $96.91 per barrel and Brent at $105.33 per barrel.

According to Gasbuddy.com (see graph at bottom), gasoline prices are down to a national average of $3.51 per gallon. Using the calculator from Professor Hamilton, and the current price of Brent crude oil, the national average should be around $3.47 per gallon. That is just below the current level according to Gasbuddy.com. A year ago gasoline was at $3.85 per gallon.

Note: If you click on "show crude oil prices", the graph displays oil prices for WTI, not Brent; gasoline prices in most of the U.S. are impacted more by Brent prices.

Orange County Historical Gas Price Charts Provided by GasBuddy.com

by Calculated Risk on 5/05/2013 03:57:00 PM

From Bloomberg: France Declares Austerity Over as Germany Offers Wiggle Room

“We’re witnessing the end of the dogma of austerity” as the only tool to fight the euro debt crisis, [French Finance Minister Pierre] Moscovici said today on Europe 1 radio. “We’ve been pleading for a growth policy for a year. Austerity on its own impedes growth.” ...

With German Chancellor Angela Merkel campaigning for a third term in a Sept. 22 vote, policy making among Europe’s elected leaders has ground to a crawl ...

There probably will not be any major changes in Europe until after Merkel's reelection.

More from Reuters: French finance minister says Europe's deficit move marks end of "austerity dogma"

The European Commission on Friday gave France two more years to meet its budget deficit target because of the country's poor economic outlook within the recession-hit euro zone.

"This is decisive, it's a turn in the history of the European project since the start of the euro," Moscovici told French radio Europe 1 in an interview. "We have witnessed the ending of a certain form of financial austerity and the end of the austerity dogma."

I doubt that the era of austerity is over - some policymakers in Europe and the US have invested their entire reputations on austerity - but maybe Europe will slow down the adjustment period.

by Calculated Risk on 5/05/2013 09:55:00 AM

From housing economist Tom Lawler:

Dataquick released its March home sales report for the Las Vegas Region based on property records, and the data highlighted that despite a plunge in REO sales, the all-cash and absentee buyer share of home sales increased from a year ago. Here are some stats on shares from the report.

Selected Share of New And Resale Home Sales, Las Vegas
	Mar-12	Mar-13
Absentee Buyer Share of Total Sales	51.2%	53.2%
All-Cash Share of Total Sales	54.4%	54.5%
Foreclosure Share of Resales	47.0%	13.5%
Estimated Short-Sales Share of Resales	28.2%	33.1%

According to the report, six buyers purchased 10 or more homes last month (excluding foreclosed homes sold at auction, and these six buyers combined purchased 255 homes – nearly 40% of total “multi-home” buyer purchases.

Based on these sales and share of sales stats, here are some different ways to look at home sales in Vegas for March of the last three years (note: Dataquick revised its methodology for estimating short sales, and has not released revised estimates for 2011).

March Home Sales, Las Vegas Region				YOY % Chg
	Mar-11	Mar-12	Mar-13	Mar-12	Mar-12
Total	4,953	5,021	4,485	1.4%	-10.7%
New	446	582	684	30.5%	17.5%
Resale	4,507	4,439	3,801	-1.5%	-14.4%
Absentee Buyer	2,472	2,571	2,386	4.0%	-7.2%
Primary Residence	2,481	2,450	2,099	-1.2%	-14.3%
All-Cash	2,675	2,731	2,444	2.1%	-10.5%
Mortgage Financed	2,278	2,290	2,041	0.5%	-10.9%
Foreclosure Resale	2,583	2,086	513	-19.2%	-75.4%
Non-Foreclosure Resale	1,924	2,353	3,288	22.3%	39.7%
Non-Foreclosure Total	2,370	2,935	3,972	23.8%	35.3%
Short Sale Resale	NA	1,252	1,258	NA	0.5%
Non-Distressed Resale	NA	1,101	2,030	NA	84.4%
Non-Distressed Total	NA	1,683	2,714	NA	61.3%
Multi-Home Buyers	N/A	539	647	N/A	20.0%

The number of homes purchased by households for their primary residence this March was down 14.3% from last March, suggesting that “owner demand” was soft in March. New home sales, however, were up 17.5% YOY (though from a low base), suggesting a decent pickup from a year ago. And mortgage-financed sales were down 10.9% from a year ago, suggesting that low mortgage rates weren’t fueling much home demand.

If one’s preferred metric is either non-foreclosure or “non-distressed” sales, however, then the Vegas market looked “sizzling,” as non-foreclosure sales this March showed a YOY increase of 39.7%, and non-distressed (sales ex foreclosures and short sales) a YOY jump of 61.3%. The reason, of course, is that while foreclosure sales plunged and short sales were little changed, absentee buyers dramatically increased their purchases of non-foreclosure (and to a lesser extent non-distressed) properties.

by Calculated Risk on 5/04/2013 05:27:00 PM

By request, here is an update to a graph that I've been posting for several years.  This shows single family housing starts (through March 2013) and the unemployment rate (inverted) through April. Note: there are many other factors impacting unemployment, but housing is a key sector.

You can see both the correlation and the lag. The lag is usually about 12 to 18 months, with peak correlation at a lag of 16 months for single unit starts. The 2001 recession was a business investment led recession, and the pattern didn't hold.

Housing starts (blue) increased a little in 2009 with the homebuyer tax credit - and then declined again - but mostly starts moved sideways for two and a half years and only started increasing steadily near the end of 2011. This was one of the reasons the unemployment rate remained elevated.

Click on graph for larger image.

Usually near the end of a recession, residential investment (RI) picks up as the Fed lowers interest rates. This leads to job creation and also additional household formation - and that leads to even more demand for housing units - and more jobs, and more households - a virtuous cycle that usually helps the economy recover.  However this time, with the huge overhang of existing housing units, this key sector didn't participate for an extended period. 

The good news is single family starts have been increasing steadily for the last 18 months or so, and I expect starts to continue to increase over the next few years. That should mean more construction employment this year, and that the unemployment rate should continue to decline.

by Calculated Risk on 5/04/2013 10:30:00 AM

This will be a very light week for economic data.

The Fed's April Senior Loan Officer Survey will be released on Monday, and Fed Chairman Ben Bernanke speaks on Friday.

Yesterday on the employment report:
• April Employment Report: 165,000 Jobs, 7.5% Unemployment Rate
• Employment Report Comments and more Graphs
• Graphs for Duration of Unemployment, Unemployment by Education and Diffusion Indexes

----- Monday, May 6th -----
Early: The LPS March Mortgage Monitor report. This is a monthly report of mortgage delinquencies and other mortgage data.

2:00 PM ET: The April 2013 Senior Loan Officer Opinion Survey on Bank Lending Practices from the Federal Reserve.  This might show some slight loosening in lending standards.

----- Tuesday, May 7th -----
10:00 AM: Trulia Price Rent Monitors for April. This is the index from Trulia that uses asking house prices adjusted both for the mix of homes listed for sale and for seasonal factors.

10:00 AM: Job Openings and Labor Turnover Survey for March 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 February to 3.925 million, up from 3.611 million in January. The number of job openings (yellow) has generally been trending up, and openings were up 11% year-over-year compared to February 2012.  This was most job openings since May 2008.

Quits were up 7% year-over-year and at the highest level since 2008. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").

3:00 PM: Consumer Credit for March from the Federal Reserve. The consensus is for credit to increase $15.0 billion in March.

----- Wednesday, May 8th -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

----- Thursday, May 9th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to increase to 335 thousand from 324 thousand last week.

10:00 AM: Monthly Wholesale Trade: Sales and Inventories for March. The consensus is for a 0.4% increase in inventories.

----- Friday, May 10th -----
9:30 AM: Speech by Fed Chairman Ben Bernanke, "Monitoring Finance", At the 49th Annual Conference on Bank Structure and Competition, Chicago, Illinois

by Calculated Risk on 5/04/2013 08:52:00 AM

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

Here is the unofficial problem bank list for May 3, 2013.

Changes and comments from surferdude808:

Unlike last week, this week was a quiet one for the Unofficial Problem Bank List with only two removals. After removal, the list now holds 773 institutions with assets of $284.9 billion. A year ago, the list held 925 institutions with assets of $361 billion. Actions were terminated against Coatesville Savings Bank, Coatesville, PA ($199 million) and Choice Bank, Oshkosh, WI ($190 million Ticker: CBKW). Next week should be a quiet one as well unless the FDIC cranks up the closing machine like it did last week.

Yesterday on the employment report:
• April Employment Report: 165,000 Jobs, 7.5% Unemployment Rate
• Employment Report Comments and more Graphs
• Graphs for Duration of Unemployment, Unemployment by Education and Diffusion Indexes