by Calculated Risk on 2/16/2015 01:16:00 PM

The Financial Times has the draft text: Eurozone's Greek talks collapse early

The draft text, obtained by the Financial Times, states that Greece would agree to a six-month "technical extension" of its current bailout ... "This would bridge the time for Greece authorites and the Eurogroup to work on a follow-up arrangement," ... Athens would "successfully conclude the programme, taking into accounts the new government's plans" and promised the "best use of the existing flexibility in the current programme".

Greece rejected this statement.

Press conference here.

by Calculated Risk on 2/16/2015 10:37:00 AM

Parts of the east coast are suffering with record snow fall, but in California, the drought continues ... last week in SoCal was like summer with temperature in the 80s!

This is the fourth year in a row with little rain or snow in the mountains (the statewide snowpack is about 27% of normal for this date). California is the largest agricultural state, and an ongoing drought could have an impact on food prices - and on the economy.


This graphic shows the National Weather Service 7 day precipitation forecast for the U.S.

California will be dry for at least another week - and the East Coast is getting too much precipitation.

by Calculated Risk on 2/15/2015 08:06:00 PM

From the WSJ: Deadline for Greek Bailout Agreement Looms

Any changes to the content or expiration date of Greece’s existing €240 billion ($273 billion) bailout have to be decided by Friday, to give national parliaments in Germany, Finland and the Netherlands enough time to approve them before the end of the month. Without such a deal, Greece will be on its own on March 1, cut loose from the rescue loans from the eurozone and the International Monetary Fund that have sustained it for almost five years.

Although Greece mostly lived up to the terms of the bailout, the promised growth never materialized (see tables below). As Greek Prime Minister recently said: "We are not negotiating the bailout; it was cancelled by its own failure.”

 The only choices are to allow Greece to run a smaller primary surplus or for Greece to leave the Eurozone and default on all their debt. The first choice seems likely, but not without some drama.

Note: Greece would have left the Eurozone in 2010 if the actual numbers below had been the plan.  No politician would have signed up for that economic devastation!

Greece: Annual GDP, Forecast and Actual1
Year	Promised	Actual
2009	-2	-4.4
2010	-4	-5.4
2011	-2.6	-8.9
2012	1.1	-6.6
2013	2.1	-3.9
2014	2.1
2015	2.7
1IMF Forecasts and Eurostat Actual

Greece: Annual Unemployment Rate, Forecast and Actual1
Year	Promised	Actual
2009	9.4	9.6
2010	11.8	12.7
2011	14.6	17.9
2012	14.8	24.5
2013	14.3	27.5
2014	14.1	26.82
2015	13.4
1IMF Forecasts and Eurostat Actual 22014 is Q1, Q2, Q3 average

by Calculated Risk on 2/15/2015 11:31:00 AM

Way back in 2006 I disagreed with some analysts on the outlook for the Inland Empire in California. I wrote:

As the housing bubble unwinds, housing related employment will fall; and fall dramatically in areas like the Inland Empire. The more an area is dependent on housing, the larger the negative impact on the local economy will be.

So I think some pundits have it backwards: Instead of a strong local economy keeping housing afloat, I think the bursting housing bubble will significantly impact housing dependent local economies.

And sure enough, the economies of housing dependent areas like the Inland Empire were devastated during the housing bust. The good news is the Inland Empire is now recovering.

Click on graph for larger image.

This graph shows the unemployment rate for the Inland Empire (using MSA: Riverside, San Bernardino, Ontario), and also the number of construction jobs as a percent of total employment.

The unemployment rate is falling, but still elevated at 7.2% (down from 15.0% in 2010). And construction employment is up only slightly from the lows (as a percent of total employment).

Overall the outlook for the Inland Empire is much better today.

by Calculated Risk on 2/14/2015 01:15:00 PM

The key economic report this week is January housing starts on Wednesday.

For manufacturing, the January Industrial Production and Capacity Utilization report, and the February NY Fed (Empire State), and Philly Fed surveys, will be released this week. 

For prices, PPI will be released on Wednesday.

----- Monday, February 16th -----
All US markets are closed in observance of the Presidents' Day holiday.

----- Tuesday, February 17th -----
8:30 AM: NY Fed Empire State Manufacturing Survey for February. The consensus is for a reading of 9.0, down from 10.0 last month (above zero is expansion).

10:00 AM: The February NAHB homebuilder survey. The consensus is for a reading of 58, up from 57 in January.  Any number above 50 indicates that more builders view sales conditions as good than poor.

----- Wednesday, February 18th -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:30 AM: Housing Starts for January.

Total housing starts were at 1.089 million (SAAR) in December. Single family starts were at 679 thousand SAAR in December.

The consensus is for total housing starts to decrease to 1.070 million (SAAR) in January.

8:30 AM: The Producer Price Index for January from the BLS. The consensus is for a 0.4% decrease in prices, and a 0.1% increase in core PPI.

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

This graph shows industrial production since 1967.

The consensus is for a 0.4% increase in Industrial Production, and for Capacity Utilization to increase to 79.9%.

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

2:00 PM: FOMC Minutes for Meeting of January 27-28, 2015

----- Thursday, February 19th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to decrease to 290 thousand from 304 thousand.

10:00 AM: the Philly Fed manufacturing survey for February. The consensus is for a reading of 8.5, up from 6.3 last month (above zero indicates expansion).

----- Friday, February 20th -----
No economic releases scheduled.

by Calculated Risk on 2/14/2015 08:07:00 AM

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

Here is the unofficial problem bank list for Feb 14, 2015.

Changes and comments from surferdude808:

A failure today reduced the Unofficial Problem Bank List to 386 institutions with assets of $121.2 billion. A year ago, the list held 586 institutions with assets of $195 billion.

The FDIC shuttered the doors of Capitol City Bank & Trust Company, Atlanta, GA ($276 million) making it the 89th bank headquartered in Georgia to fail since the on-set of the Great Recession. Astonishingly, the FDIC estimates the failure cost at $88.9 million or nearly 33 percent of the bank's assets.

Historically, commercial bank failure are usually around 12¢ on the dollar. Even with a well above average cost percentage, Capitol City Bank & Trust only ranks as the 54th most expensive failure, in cost percentage terms, of the 89 Georgia closures. Moreover, its cost is under the Georgia average failure cost of 34.7 percent of failed bank assets.

Next week, we anticipate the OCC will release an update on its latest enforcement action activities..

by Calculated Risk on 2/13/2015 06:55:00 PM

Another bank failure in Georgia ...

From the FDIC: First-Citizens Bank & Trust Company, Raleigh, North Carolina, Assumes All of the Deposits of Capitol City Bank & Trust Company, Atlanta, Georgia

As of December 31, 2014, Capitol City Bank & Trust Company had approximately $272.3 million in total assets and $262.7 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $88.9 million. ... Capitol City Bank & Trust Company is the third FDIC-insured institution in the nation to fail this year, and the first in Georgia. The last FDIC-insured institution closed in the state was Eastside Commercial Bank, Conyers, on July 18, 2014.

At least we know it is Friday.

by Calculated Risk on 2/13/2015 02:34:00 PM

Repeat: Here are animations of the U.S population by age and distribution, from 1900 through 2060. The population data and estimates are from the Census Bureau (actual through 2010 and projections through 2060).

Also - by request - I've slowed the animation down to 2 seconds per slide (and included a slower distribution animation below).

Note: For distribution, here are the same graphs using a slider (the user can look at individual slides).

There are many interesting points - the Depression baby bust, the baby boom, the 2nd smaller baby bust following the baby boom, the "echo" boom" and more. What jumps out at me are the improvements in health care. And also that the largest cohorts will all soon be under 40. Heck, in the last frame (2060), any remaining Boomers will be in those small (but growing) 95 to 99, and 100+ cohorts.

Animation updates every two seconds.

Notes: Population is in thousands (not labeled)! Prior to 1940, the oldest group in the Census data was "75+".  From 1940 through 1985, the oldest group was "85+".  Starting in 1990, the oldest group is 100+.

The second graph is by distribution (updates every 2 seconds).

by Calculated Risk on 2/13/2015 11:14:00 AM

Here is a graph of expenditures on energy goods and services as a percent of total personal consumption expenditures through December 2014.

This is one of the measures that Professor Hamilton at Econbrowser looks at to evaluate any drag on GDP from energy prices.


Click on graph for larger image.

Data source: BEA Table 2.3.5U.

The huge spikes in energy prices during the oil crisis of 1973 and 1979 are obvious. As is the increase in energy prices during the 2001 through 2008 period.

With the recent decline in energy prices, this ratio has declined sharply.  Hopefully energy prices are resuming their long term down trend as a percent of PCE.

by Calculated Risk on 2/13/2015 10:04:00 AM

Click on graph for larger image.

The preliminary University of Michigan consumer sentiment index for February was at 93.6, down from 98.1 in January.

This was below the consensus forecast of 98.5. Somewhat higher gasoline prices are probably the reason for the decline in February.