by Calculated Risk on 10/13/2019 10:32:00 AM

The following graph shows heavy truck sales since 1967 using data from the BEA. The dashed line is the September 2019 seasonally adjusted annual sales rate (SAAR).

Heavy truck sales really collapsed during the great recession, falling to a low of 180 thousand in May 2009, on a seasonally adjusted annual rate basis (SAAR). Then sales increased more than 2 1/2 times, and hit 479 thousand SAAR in June 2015.

Heavy truck sales declined again - mostly due to the weakness in the oil sector - and bottomed at 366 thousand SAAR in October 2016.


Click on graph for larger image.

Following the low in 2016, heavy truck sales increased to a new all time high in July 2019, but have declined over the last couple months.

Heavy truck sales were at 501 thousand SAAR in September, down from 538 thousand SAAR in August, and down from 526 thousand SAAR in September 2018.

by Calculated Risk on 10/12/2019 08:11:00 AM

The key economic reports this week are September Housing Starts and Retail Sales.

For manufacturing, September Industrial Production, and the October New York and Philly Fed surveys, will be released this week.

----- Monday, Oct 14th -----
Columbus Day Holiday: Banks will be closed in observance of Columbus Day. The stock market will be open. No economic releases are scheduled.

----- Tuesday, Oct 15th -----
8:30 AM ET: The New York Fed Empire State manufacturing survey for October. The consensus is for a reading of 0.8, down from 2.0.

----- Wednesday, Oct 16th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:30 AM ET: Retail sales for September will be released.  The consensus is for a 0.3% increase in retail sales.

This graph shows the year-over-year change in retail sales and food service (ex-gasoline) since 1993. Retail and Food service sales, ex-gasoline, increased by 4.5% on a YoY basis in August.

10:00 AM: The October NAHB homebuilder survey. The consensus is for a reading of  68, unchanged from 68 in September. Any number above 50 indicates that more builders view sales conditions as good than poor.

----- Thursday, Oct 17th -----
8:30 AM: Housing Starts for September.

This graph shows single and total housing starts since 1968.

The consensus is for 1.300 million SAAR, down from 1.364 million SAAR.

8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for 215,000 initial claims, up from 210,000 last week.

8:30 AM: the Philly Fed manufacturing survey for October. The consensus is for a reading of 7.1, down from 12.0.

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

This graph shows industrial production since 1967.

The consensus is for a 0.2% decrease in Industrial Production, and for Capacity Utilization to decline to 77.8%.

----- Friday, Oct 18th -----
10:00 AM: State Employment and Unemployment (Monthly) for September 2019

by Calculated Risk on 10/11/2019 07:47:00 PM

From SacRealtor.org: Sales volume declines for September, median sale price flat

September closed with 1,393 sales, an 11.1% decrease from August’s 1,567 sales. Compared to September 2018 (1,318), the current figure is up 5.7%.
...
The Active Listing Inventory decreased slightly from 2,460 to 2,457 units. The Months of Inventory increased from 1.6 to 1.8 Months. This figure represents the amount of time (in months) it would take for the current rate of sales to deplete the total active listing inventory. [Note: Compared to September 2018, inventory is down 24.1%] .
...
The Median DOM (days on market) remained at 12 and the Average DOM remained at 25. “Days on market” represents the days between the initial listing of the home as “active” and the day it goes “pending.” Of the 1,393 sales this month, 74.2% (1,034) were on the market for 30 days or less and 90.1% (1,246) were on the market for 60 days or less.
emphasis added

1) Overall sales increased to 1,393 in September, up from 1,318 in September 2018. Sales were down 11.1% from August 2019 (previous month), and up 5.7% from September 2018.

2) Active inventory was at 2,457, down from 3,236 in September 2018. That is down 24.1% year-over-year.  This is the fifth consecutive YoY decline following 20 months of YoY increases in inventory.

This is another market that picked up in September.

by Calculated Risk on 10/11/2019 01:23:00 PM

From Merrill Lynch:

Misses in construction spending and trade coupled with negative revisions to capex data sliced 0.3pp from 3Q GDP tracking this week, leaving us at 1.6% qoq saar. [Oct 11 estimate]
emphasis added

From the NY Fed Nowcasting Report

The New York Fed Staff Nowcast stands at 2.0% for 2019:Q3 and 1.3% for 2019:Q4. [Oct 11 estimate].

And from the Altanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2019 is 1.7 percent on October 9, down from 1.8 percent on October 4. [Oct 9 estimate]

CR Note: These estimates suggest real GDP growth will be just under 2.0% annualized in Q3.

by Calculated Risk on 10/11/2019 11:22:00 AM

From Dodge Data Analytics: Dodge Momentum Index Posts Gain in September

The Dodge Momentum Index moved 4.1% higher in September to 143.6 (2000=100) from the revised August reading of 137.9. The Momentum Index, issued by Dodge Data & Analytics, is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year.

The gain in September was due entirely to an 8.9% increase in the commercial component, while the institutional component fell 4.8%.

For the third quarter, the overall Momentum Index averaged 140.1, a scant increase of 0.7% from its average in the previous quarter. Compared to the third quarter of 2018, however, the Momentum Index is 8.6% lower with the commercial component 3.7% lower than a year ago and the institutional component down 16.2%. While the dollar volume of projects in planning is certainly lower than it was a year ago, the index has moved more sideways than downward over the last two quarters.
emphasis added

Click on graph for larger image.

This graph shows the Dodge Momentum Index since 2002. The index was at 143.6 in September, up from 137.9 in August.

According to Dodge, this index leads "construction spending for nonresidential buildings by a full year".  After declining late last year, this index has moved mostly sideways in 2019.

by Calculated Risk on 10/11/2019 09:05:00 AM

From HotelNewsNow.com: STR: US hotel results for week ending 5 October

The U.S. hotel industry reported negative year-over-year results in the three key performance metrics during the week of 29 September through 5 October 2019, according to data from STR.

In comparison with the week of 30 September through 6 October 2018, the industry recorded the following:

• Occupancy: -3.9% to 68.1%
• Average daily rate (ADR): -3.8% to US$129.21
• Revenue per available room (RevPAR): -7.5% to US$88.00

STR analysts attribute significant performance decreases in many markets to the Rosh Hashanah calendar shift. Travel and conference schedules during the comparable time period last year were not affected by the Jewish holidays.
emphasis added

The following graph shows the seasonal pattern for the hotel occupancy rate using the four week average.

Click on graph for larger image.

The red line is for 2019, dash light blue is 2018 (record year), blue is the median, and black is for 2009 (the worst year probably since the Great Depression for hotels).

Occupancy has been solid in 2019, and close to-date compared to the previous 4 years.

However occupancy will be lower this year than in 2018 (the record year).

Seasonally, the 4-week average of the occupancy rate will now increase during the Fall business travel season.

Data Source: STR, Courtesy of HotelNewsNow.com

by Calculated Risk on 10/10/2019 04:18:00 PM

One of the metrics we'd like to follow is a ratio of house prices to incomes. Unfortunately most income data is released with a significantly lag, and there are always questions about which income data to use (the average total income is skewed by the income of a few people).

And for key measures of house prices - like Case-Shiller - we have indexes, not actually prices.

But we can construct a ratio of the house price indexes to some measure of income.

For this graph I decided to look at house prices and the National Average Wage Index released today for 2018 from Social Security.

Note: For a different look at house prices and income, see this post (using median income).

Click on graph for larger image.

This graph shows the ratio of house price indexes divided by the National Average Wage Index (the Wage index is first divided by 1000).

This uses the annual average National Case-Shiller index since 1976.

As of 2018, house prices were somewhat above the median historical ratio - but far below the bubble peak. 

Going forward, I think it would be a positive if wages outpaced, or at least kept pace with house prices increases for a few years.

Note: The national wage index for 2019 is estimated using the median increase over the last several years.

by Calculated Risk on 10/10/2019 01:35:00 PM

Another hot regional market in September.

From the HAR: The Houston Housing Market Shows no Letup in September

Houston home sales registered the seventh positive month of 2019 in September as consumers continued to take advantage of low mortgage interest rates, keeping a market that normally slows down this time of year buzzing. According to the latest monthly report from the Houston Association of Realtors (HAR), sales of single-family homes across the Houston area totaled 7,035 in September. That is up 9.5 percent year-over-year and marks the second largest one-month sales volume of the year. On a year-to-date basis, home sales are running 3.8 percent ahead of 2018’s record volume.
...
Buyers have had a more plentiful supply of homes from which to choose in 2019 compared to last year. In September, housing inventory edged up to a 4.1-months supply versus 4.0 months in September 2018. So far this year, the peak of inventory was reached in June and July when it registered a 4.3-months supply.

“I cannot recall a fall in Houston when home sales and rentals were quite this brisk,” said HAR Chair Shannon Cobb Evans with Better Homes and Gardens Real Estate Gary Greene. “Historically low interest rates and a strong overall local economy have drawn more buyers than usual to the market and kept Realtors like myself extremely busy. We remain on track for another record year.”
emphasis added

Total active inventory was up 7.3% YoY to 44,172 properties from 41,174 properties in September 2018. Sales are on pace for a record year.

by Calculated Risk on 10/10/2019 11:09:00 AM

The Cleveland Fed released the median CPI and the trimmed-mean CPI this morning:

According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% (3.0% annualized rate) in September. The 16% trimmed-mean Consumer Price Index also rose 0.2% (1.9% annualized rate) during the month. The median CPI and 16% trimmed-mean CPI are measures of core inflation calculated by the Federal Reserve Bank of Cleveland based on data released in the Bureau of Labor Statistics’ (BLS) monthly CPI report.

Earlier today, the BLS reported that the seasonally adjusted CPI for all urban consumers was unchanged (0.3% annualized rate) in September. The CPI less food and energy rose 0.1% (1.6% annualized rate) on a seasonally adjusted basis.

Note: The Cleveland Fed released the median CPI details for September here. Motor fuel was down 25% annualized.

Click on graph for larger image.

This graph shows the year-over-year change for these four key measures of inflation. On a year-over-year basis, the median CPI rose 3.0%, the trimmed-mean CPI rose 2.3%, and the CPI less food and energy rose 2.4%. Core PCE is for August and increased 1.6% year-over-year.

On a monthly basis, median CPI was at 3.0% annualized and trimmed-mean CPI was at 1.9% annualized.

Overall, these measures are mostly above the Fed's 2% target (Core PCE is below 2%).

by Calculated Risk on 10/10/2019 09:37:00 AM

With the release of the CPI report this morning, we now know the Cost of Living Adjustment (COLA), and the contribution base for 2020.

From Social Security: Social Security Announces 1.6 Percent Benefit Increase for 2020

Social Security and Supplemental Security Income (SSI) benefits for nearly 69 million Americans will increase 1.6 percent in 2020, the Social Security Administration announced today.

The 1.6 percent cost-of-living adjustment (COLA) will begin with benefits payable to more than 63 million Social Security beneficiaries in January 2020. Increased payments to more than 8 million SSI beneficiaries will begin on December 31, 2019. (Note: some people receive both Social Security and SSI benefits). The Social Security Act ties the annual COLA to the increase in the Consumer Price Index as determined by the Department of Labor’s Bureau of Labor Statistics.

Some other adjustments that take effect in January of each year are based on the increase in average wages. Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $137,700 from $132,900.

Currently CPI-W is the index that is used to calculate the Cost-Of-Living Adjustments (COLA). Here is a discussion from Social Security on the current calculation (1.6% increase) and a list of previous Cost-of-Living Adjustments.

The contribution and benefit base will be $137,700 in 2020.

The National Average Wage Index increased to $52,145.80 in 2018, up 3.6% from $50,321.89 in 2017 (used to calculate contribution base).