by Calculated Risk on 9/27/2014 01:11:00 PM

This will be a busy week for economic data.  The key report is the September employment report on Friday.

Other key reports include the August Personal Income and Outlays report on Monday, the July Case-Shiller House Price Index on Tuesday, the ISM manufacturing index and September vehicle sales both on Wednesday, and the August Trade Deficit and September ISM non-manufacturing index on Friday.

Also, Reis is scheduled to release their Q3 surveys of rents and vacancy rates for apartments, offices and malls.

----- Monday, September 29th -----
8:30 AM: Personal Income and Outlays for August. The consensus is for a 0.3% increase in personal income, and for a 0.4% increase in personal spending. And for the Core PCE price index to be unchanged.

10:00 AM ET: Pending Home Sales Index for August. The consensus is for a 0.3% decrease in the index.

10:30 AM: Dallas Fed Manufacturing Survey for September.

----- Tuesday, September 30th -----
9:00 AM: S&P/Case-Shiller House Price Index for July. Although this is the June report, it is really a 3 month average of May, June and July.

NOTE: S&P is now releasing the National house price index monthly, and I expect reporting to shift from the Composite 20 to the National index. The National index was up 6.2% year-over-year in June.

This graph shows the nominal seasonally adjusted Composite 10 and Composite 20 indexes through the June 2014 report (the Composite 20 was started in January 2000).

The consensus is for a 7.5% year-over-year increase in the Composite 20 index (NSA) for July. The Zillow forecast is for the Composite 20 to increase 7.0% year-over-year, and for prices to increase 0.1% month-to-month seasonally adjusted.

9:45 AM: Chicago Purchasing Managers Index for September. The consensus is for a reading of 61.5, down from 64.3 in August.

----- Wednesday, October 1st -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

All day: Light vehicle sales for September. The consensus is for light vehicle sales to decrease to 16.8 million SAAR in September from 17.4 million in August (Seasonally Adjusted Annual Rate).

This graph shows light vehicle sales since the BEA started keeping data in 1967. The dashed line is the August sales rate.

8:15 AM: The ADP Employment Report for September. This report is for private payrolls only (no government). The consensus is for 200,000 payroll jobs added in September, down from 205,000 in August.

Early: Reis Q3 2014 Office Survey of rents and vacancy rates.

10:00 AM: ISM Manufacturing Index for September. The consensus is for a decrease to 58.0 from 59.0 in August

Here is a long term graph of the ISM manufacturing index.

The ISM manufacturing index indicated expansion in August at 59.0%. The employment index was at 58.1%, and the new orders index was at 66.7%.

10:00 AM: Construction Spending for August. The consensus is for a 0.5% increase in construction spending.

----- Thursday, October 2nd -----
Early: Reis Q3 2014 Apartment Survey of rents and vacancy rates.

8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to increase to 297 thousand from 293 thousand.

10:00 AM: Manufacturers' Shipments, Inventories and Orders (Factory Orders) for August. The consensus is for a 9.4 decrease in August orders.

----- Friday, October 3rd -----
8:30 AM: Employment Report for September. The consensus is for an increase of 215,000 non-farm payroll jobs added in September, up from the 142,000 non-farm payroll jobs added in August.

The consensus is for the unemployment rate to be unchanged at 6.1% in September.

This graph shows the year-over-year change in total non-farm employment since 1968.

In August, the year-over-year change was 2.482 million job, and it generally appears the pace of hiring is increasing.

Right now it looks possible that 2014 will be the best year since 1999 for both total nonfarm and private sector employment growth.

As always, a key will be the change in real wages - and as the unemployment rate falls, wage growth should eventually start to pickup.

Early: Reis Q3 2014 Mall Survey of rents and vacancy rates.

8:30 AM: Trade Balance report for August from the Census Bureau.

Imports and exports increased in July.

The consensus is for the U.S. trade deficit to be at $40.7 billion in August from $40.5 billion in July.

10:00 AM: ISM non-Manufacturing Index for September. The consensus is for a reading of 58.8, down from 59.6 in August. Note: Above 50 indicates expansion.

by Calculated Risk on 9/27/2014 08:12:00 AM

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

Here is the unofficial problem bank list for Sept 26, 2014.

Changes and comments from surferdude808:

The FDIC provided us with an update on its enforcement action activities through August. The update led to five removals and two additions that leave the Unofficial Problem Bank List at 432 institutions with assets of $136.8 billion. A year ago, the list held 690 institutions with assets of $240.5 billion. For the month, the list declined by seven institutions after eight action terminations, two mergers, and three additions. Over the past 28 months, the list has been declining but the drop this month is the smallest over this period.

The FDIC terminated actions against The Bank of Elk River, Elk River, MN ($350 million); Flathead Bank of Bigfork, Montana, Bigfork, MT ($209 million); First State Bank, Wrens, GA ($90 million); Waterman State Bank, Waterman, IL ($42 million); and Marshall County State Bank, Varna, IL ($28 million).

The FDIC issued actions against Independence Bank, East Greenwich, RI ($53 million) and Alamerica Bank, Birmingham, AL ($39 million).

Next week should be light in terms of changes to the list but we will bring an update to the problem bank transition matrix.

CR Note: The first unofficial problem bank list was published in August 2009 with 389 institutions. The list peaked at 1,002 institutions on June 10, 2011, and is now down to 432.

by Calculated Risk on 9/26/2014 04:44:00 PM

Several years ago, I occasionally attended the same yoga class as former PIMCO CIO Bill Gross.

In June 2007 (a few months before the recession started), I was waiting for a yoga class and happened to be standing right next to Mr. Gross.

Some random guy walked up to Gross and asked him if it was time to buy distressed bonds (Tanta and I were writing about the coming recession and how many financial institutions would be in trouble or gone).

Gross answered "probably" (time to buy distressed bonds) ... and I almost screamed "No".  Then I realized maybe Gross didn't like that guy ... or he didn't like being asked about bonds at a yoga class.

Of course neither of them knew me - but I called Tanta after the class and told her what Gross said.  And that was the source of Tanta's joke in this post: BONG HiTS 4 BILL GROSS!

by Calculated Risk on 9/26/2014 12:05:00 PM

The September employment report will be released next Friday, October 3rd, and the consensus is that 200 thousand payroll jobs were added in September and the unemployment rate was unchanged at 6.1%.

Here are two forecasts:

From Merrill Lynch:

The September employment report is likely to reveal solid job growth of 235,000 with possible upward revisions to prior months. Job growth was disappointing in August, only increasing 142,000, notably below the recent trend. There has been a pattern of upward revisions to the jobs report in August, averaging about 30,000. Our forecast for September combined with likely positive revisions should keep the 3-month moving average for payrolls above 200,000. Among the components, we think government jobs will be up 10,000 while private payrolls expand 225,000. We forecast a strong gain in manufacturing jobs, reflecting healthy improvement in the survey data. Job growth in the retail sector should also be solid after a decline in August. The continued modest improvement in housing construction should continue to support hiring in the sector.

We forecast the unemployment rate to hold steady at 6.1% in September. The labor force participation rate fell in August while household jobs were particularly soft. We do not expect the same for September, although there is a great deal of uncertainty in the monthly forecasts of labor force participation. Average hourly earnings are likely to continue to increase at a trend 0.2% mom rate, which will push the yoy rate up to 2.2%. While this is a pickup from the annual pace in August, it is within the recent range for growth in average hourly earnings.
emphasis added

From Nomura:

Payroll growth surprised to the downside in August. However, incoming labor market indicators released since the last jobs report have been generally more favorable for payroll growth. Initial jobless and continuing claims are still near pre-recession levels. In addition, regional manufacturing surveys released thus far in September suggest that manufacturing employment continued to increase.

Based on these labor market readings in September, we forecast a 200k increase in private payrolls, with a 10k increase in government jobs, implying that total nonfarm payrolls will gain 210k. Furthermore, given the solid momentum implied by regional manufacturing surveys, we expect manufacturing employment to grow by 15k. We forecast that average hourly earnings for private employees rose by 0.25% again in September, supporting our forecast of a gradual pick-up in wage inflation. Lastly, based on the improvement in continuing jobless claims, we expect the household survey to show that the unemployment rate fell 0.1pp to 6.0%.

CR Note: In August, a strike at Market Basket in New England negatively impacted the employment report. From BLS Commissioner Erica Groshen:

Within retail, employment declined in food and beverage stores (-17,000); this industry was impacted by employment disruptions at a grocery store chain in New England.

The disruption ended quickly, and food and beverage employment should bounce back in September.

by Calculated Risk on 9/26/2014 09:55:00 AM

Click on graph for larger image.

The final Reuters / University of Michigan consumer sentiment index for September was at 84.6, unchanged from the preliminary reading of 84.6, and up from 82.5 in August.

This was at the consensus forecast of 84.6. Sentiment has generally been improving following the recession - with plenty of ups and downs - and a big spike down when Congress threatened to "not pay the bills" in 2011.

by Calculated Risk on 9/26/2014 08:36:00 AM

From the BEA: Gross Domestic Product: Second Quarter 2014 (Third Estimate)

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 4.6 percent in the second quarter of 2014, according to the "third" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 2.1 percent.

The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the increase in real GDP was 4.2 percent. With the third estimate for the second quarter, the general picture of economic growth remains the same; increases in nonresidential fixed investment and in exports were larger than previously estimated ...

The increase in real GDP in the second quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, private inventory investment, nonresidential fixed investment, state and local government spending, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.

Real GDP increased 4.6 percent in the second quarter, after decreasing 2.1 percent in the first. This upturn in the percent change in real GDP primarily reflected upturns in exports and in private inventory investment, accelerations in nonresidential fixed investment and in PCE, and upturns in state and local government spending and in residential fixed investment that were partly offset by an acceleration in imports.

Here is a Comparison of Third and Second Estimates.

by Calculated Risk on 9/25/2014 08:55:00 PM

From Merrill Lynch:

We look for 2Q GDP growth to be revised up yet again, likely by another 0.6pp bringing GDP growth to 4.8% qoq saar. Revisions to construction data suggest greater investment in nonresidential structures and slightly more residential construction. We also expect the trade data to be adjusted to show a narrower deficit. Inventories should also be revised lower, perhaps adding 1.3pp to growth versus the prior estimate of 1.7pp. Spending on consumer services will also likely be revised, but there is uncertainty on the magnitude.

Friday:
• At 8:30 AM ET, Gross Domestic Product, 2nd quarter 2014 (third estimate). The consensus is that real GDP increased 4.6% annualized in Q2, up from 4.2% in the second estimate.

• At 9:55 AM, Reuter's/University of Michigan's Consumer sentiment index (final for September). The consensus is for a reading of 84.6, unchanged from the preliminary reading of 84.6, and up from the August reading of 82.5.

by Calculated Risk on 9/25/2014 05:52:00 PM

From housing economist Tom Lawler:

ACS: Sharp Slowdown in Household Growth in 2013 Mainly Attributable to Fewer Folks Living Alone, Big Increases in “Doubling (and more) Up”

As I noted last week, ACS for 2013 suggested that there was a sharp slowdown in the growth of the number of households in 2013.

That sharp slowdown was not because of slower population growth, but instead was attributable to a significant jump in the average household size – though that in and of itself is not insightful, since if the growth rate in households is below the growth rate in the household population, ...

While I hope to send out a write up tomorrow, the table below I believe provides some significant insights into the jump in average household size/slowdown in household growth.

 The table compares changes in household populations and households for various households/relationships from 2012 to 2013 with annual average changes from 2010 to 2012. Certain really significant differences are in bold type.

Households and Household Populations by Various Types, ACS
				Annual Change
	2013	2012	2010	2012-2013	2010-2012 (Average)
Population in Households	308,099,169	305,885,362	301,362,366	2,213,807	2,261,498
Households	116,291,033	115,969,540	114,567,419	321,493	701,061
Average Household Size	2.649	2.638	2.630	0.012	0.004
Population in Family Households	256,991,641	255,379,222	252,364,729	1,612,419	1,507,247
Family Households	76,680,463	76,509,262	76,089,045	171,201	210,109
One-Person Households	32,242,369	32,256,217	31,403,342	-13,848	426,438
Population in 2+ Non-Family Households	18,865,159	18,249,923	17,594,295	615,236	327,814
2+ Non-Family Households	7,368,201	7,204,061	7,075,032	164,140	64,515
Population in Family Households	256,991,641	255,379,222	252,364,729	1,612,419	1,507,247
Householder, Spouse, Child	226,742,233	226,165,010	223,905,638	577,223	1,129,686
Other Relative (including In-Laws)	22,938,742	22,275,332	21,610,953	663,410	332,190
Nonrelatives	7,310,666	6,938,880	6,848,138	371,786	45,371
Population in 2+ Non-Family Households	18,865,159	18,249,923	615,236	615,236	8,817,344
Householder	7,368,201	7,204,061	7,075,032	164,140	64,515
Unmarried Partner	3,952,380	3,909,449	3,809,564	42,931	49,943
Other	11,447,016	11,045,862	10,519,263	401,154	263,300
Average Household Size, 2+ Non-Family Household	2.560	2.533	2.487	0.027	0.023
Roomer or boarder	1,694,477	1,567,268	1,595,106	127,209	-13,919
In Family Household	673,210	612,741	671,299	60,469	-29,279
In Non-Family Household	1,021,267	954,527	923,807	66,740	15,360
Housemate or Roommate	5,978,352	5,793,412	5,587,176	184,940	103,118
In Family Household	1,206,366	1,189,913	1,180,670	16,453	4,622
In Non-Family Household	4,771,986	4,603,499	4,406,506	168,487	98,497
Other non-partner/non-foster child Non-relative	3,813,499	3,435,254	3,129,423	378,245	152,916
In Family Household	2,097,727	1,895,833	1,796,638	201,894	49,598
In Non-Family Household	1,715,772	1,539,421	1,332,785	176,351	103,318

by Calculated Risk on 9/25/2014 02:29:00 PM

The automakers will report September vehicle sales on Wednesday, Oct 1st. Sales in August were at 17.45 million on a seasonally adjusted annual rate basis (SAAR), and it appears sales in September will be solidly above 16 million SAAR again.

Note:  There were 24 selling days in September this year compared to 23 last year.

Here are a few forecasts:

From J.D. Power: Summer Sizzle Continues as New-Vehicle Sales in August Forecast to Hit Highest Levels of the Year

New-vehicle retail sales in September 2014 are projected to come in at 1.0 million units, a 94,000-unit increase from September 2013 and 6 percent growth on a selling-day adjusted basis (September 2014 has 24 selling days, compared with 23 in September 2013). The retail seasonally adjusted annualized rate (SAAR) in September is expected to be 13.5 million units—which is 1.2 million units more than in September 2013—marking the seventh consecutive month in which the SAAR has exceeded 13 million units. Retail transactions are the most accurate measure of true underlying consumer demand for new vehicles.

The strong sales pace in September is noteworthy as it follows an exceptionally strong August when retail sales reached 1,378,588.

“Vehicle sales typically fall sharply immediately following the Labor Day holiday before recovering later in the month, but the decline this September has been smaller than in prior years,” said John Humphrey, senior vice president of the global automotive practice at J.D. Power. “While the strong sales pace is an indicator of the health of the industry, it is being complemented by record transaction prices for the month of September.” [Total forecast 16.5 million SAAR]

From Kelley Blue Book: New-Vehicle Sales To Climb 9 Percent In September; Kelley Blue Book Adjusts 2014 Forecast To 16.4 Million

New-vehicle sales are expected to increase 9.1 percent year-over-year to a total of 1.24 million units, resulting in an estimated 16.4 million seasonally adjusted annual rate (SAAR), according to Kelley Blue Book ... "Following an extraordinarily strong month of sales in August, with the industry above 17 million SAAR for the first time in eight years, Kelley Blue Book expects sales to level out in September," said Alec Gutierrez, senior analyst for Kelley Blue Book. "Sales will remain strong and show healthy year-over-year improvement. Rising incentive spend in recent months has been more than offset by increasing retail transaction prices, signaling continued consumer demand."

From TrueCar: TrueCar Forecasts Continued Strong New Vehicle Sales Growth in September; Up 9.7% Compared to Last Year

Seasonally Adjusted Annualized Rate ("SAAR") of 16.4 million new vehicle sales.

TrueCar's 2014 Annual Sales Forecast remains at 16.4 million vehicles as well.

Another solid month for auto sales, and this should be the best year since 2006.

by Calculated Risk on 9/25/2014 11:10:00 AM

From the Kansas City Fed: Growth in Tenth District Manufacturing Activity Edged Higher

The Federal Reserve Bank of Kansas City released the September Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that growth in Tenth District manufacturing activity edged higher, and producers’ expectations for future activity maintained their recent solid levels.

“We saw slightly faster growth this month after a sizable easing in August,” Wilkerson said. “This is despite continued sluggish activity in our important food processing segment, driven in part by higher beef costs this year.”

The month-over-month composite index was 6 in September, slightly higher than 3 in August but lower than 9 in July. The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. ... The production index increased from 4 to 12, and the shipment index also grew from a reading of 2 in August to 14. The employment index increased significantly from -4 in the last survey period to 7 in September.
emphasis added

The last regional Fed manufacturing survey for September will be released on Monday, Sept 29th (the Dallas Fed). All of the regional surveys so far have indicated solid growth in September (three out of four higher than in August), and this suggests another strong reading for the ISM manufacturing survey.