by Calculated Risk on 6/08/2020 05:51:00 PM

Note: I started posting this graph when the US was doing a few thousand tests per day. Clearly the US was way under testing early in the pandemic. I'll continue posting this graph daily at least until the percent positive is continuously under 3% and the daily positive is significantly lower than today.

The US is now usually conducting over 400,000 tests per day, and that might be enough to allow test-and-trace in some areas. Based on the experience of other countries, the percent positive needs to be well under 5% to really push down new infections, so the US still needs to increase the number of tests per day significantly.

According to Dr. Jha of Harvard's Global Health Institute, the US might need more than 900,000 tests per day .

There were 379,625 test results reported over the last 24 hours.

Click on graph for larger image.

This data is from the COVID Tracking Project.

The percent positive over the last 24 hours was 4.3% (red line).

For the status of contact tracing by state, check out testandtrace.com.

by Calculated Risk on 6/08/2020 04:19:00 PM

Note: To put these numbers in perspective, the MBA notes "For the week of March 2, only 0.25% of all loans were in forbearance."

From the MBA: Share of Mortgage Loans in Forbearance Increases to 8.53%

The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance increased from 8.46% of servicers’ portfolio volume in the prior week to 8.53% as of May 31, 2020. According to MBA’s estimate, almost 4.3 million homeowners are now in forbearance plans.
...
“The overall share of loans in forbearance increased by only 7 basis points compared to the prior week. With the job market beginning to gradually improve, more homeowners are exiting forbearance, and we are seeing declines in forbearance volume among some servicers,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “However, this week’s findings did reveal divergence among servicers. The share of loans in forbearance decreased for depository servicers but continued to increase for IMBs.”

Added Fratantoni, “While servicers reported only a 1-basis-point increase in the forbearance share for GSE and Ginnie Mae loans, the increase for private-label securities and portfolio loans rose to over 10 percent, which is higher than the rate on GSE loans.”
emphasis added

The MBA notes: "Forbearance requests as a percent of servicing portfolio volume (#) dropped across all investor types for the eighth consecutive week relative to the prior week: from 0.20% to 0.17%."

by Calculated Risk on 6/08/2020 02:13:00 PM

On June 9th, at 11:30 AM Pacific Time, UCI Finance Professor Christopher Schwarz and I will be discussing the June 2020 economic outlook.

This is a free event, and you can register at Registration Link for June 2020 Market & Economic Update.    The presentation will be about 30 minutes, followed by a Q&A period.

Click on banner for a larger image.

by Calculated Risk on 6/08/2020 01:21:00 PM

This was a quick call from NBER. Usually it takes many months, but this recession was obvious. Note that they think the recession will likely be shorter than previous recession (just meaning activity will start increasing from the bottom).

From NBER: Determination of the February 2020 Peak in US Economic Activity

Cambridge, June 8, 2020 - The Business Cycle Dating Committee of the National Bureau of Economic Research maintains a chronology of the peaks and troughs of U.S. business cycles. The committee has determined that a peak in monthly economic activity occurred in the U.S. economy in February 2020. The peak marks the end of the expansion that began in June 2009 and the beginning of a recession. The expansion lasted 128 months, the longest in the history of U.S. business cycles dating back to 1854. The previous record was held by the business expansion that lasted for 120 months from March 1991 to March 2001.

The committee also determined that a peak in quarterly economic activity occurred in 2019Q4. Note that the monthly peak (February 2020) occurred in a different quarter (2020Q1) than the quarterly peak. The committee determined these peak dates in accord with its long-standing policy of identifying the months and quarters of peak activity separately, without requiring that the monthly peak lie in the same quarter as the quarterly peak. Further comments on the difference between the quarterly and monthly dates are provided below.

A recession is a significant decline in economic activity spread across the economy, normally visible in production, employment, and other indicators. A recession begins when the economy reaches a peak of economic activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion.

Because a recession is a broad contraction of the economy, not confined to one sector, the committee emphasizes economy-wide indicators of economic activity. The committee believes that domestic production and employment are the primary conceptual measures of economic activity.
…
The usual definition of a recession involves a decline in economic activity that lasts more than a few months. However, in deciding whether to identify a recession, the committee weighs the depth of the contraction, its duration, and whether economic activity declined broadly across the economy (the diffusion of the downturn). The committee recognizes that the pandemic and the public health response have resulted in a downturn with different characteristics and dynamics than prior recessions. Nonetheless, it concluded that the unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warrants the designation of this episode as a recession, even if it turns out to be briefer than earlier contractions.
emphasis added

by Calculated Risk on 6/08/2020 01:07:00 PM

Black Knight released their Mortgage Monitor report for April today. According to Black Knight, 6.45% of mortgages were delinquent in April, up from 3.47% in April 2019. Black Knight also reported that 0.40% of mortgages were in the foreclosure process, down from 0.50% a year ago.

This gives a total of 6.85% delinquent or in foreclosure.

Press Release: Black Knight: Just One in 10 Homeowners in Forbearance Hold 10% or Less Equity in Their Homes; Share Much Higher Among FHA/VA Loans

Today, the Data & Analytics division of Black Knight, Inc. released its latest Mortgage Monitor Report, based upon the company’s industry-leading mortgage performance, housing and public records datasets. As Black Knight reported on June 5, forbearance volumes fell for the first time since the crisis began between May 26 and June 2. As Black Knight Data & Analytics President Ben Graboske explained, the focus of industry participants – especially servicers and mortgage investors – must now shift from pipeline growth to pipeline management and downstream performance of loans in forbearance.

“The first decline in the number of homeowners in active forbearance volumes is undoubtedly a good sign, particularly coming as it does on the heels of an overall trend of flattening inflow,” said Graboske. “Of course, the shift from pipeline growth to pipeline management presents its own set of challenges for servicers and investors. The good news is that equity positions among homeowners in forbearance are by and large strong. Nearly 80% of homeowners in active forbearance have 20% or more equity in their homes, providing homeowners, servicers and regulators with options for helping to avoid downstream foreclosure activity and default-related losses. Just 9% have 10% or less equity – typically enough to cover the cost of a sale of a property – with another 1% underwater on their mortgages. Of course, this leaves a population of nearly half a million homeowners who may lack the necessary equity to sell their homes to avoid foreclosure in a worst-case scenario. Looking at this population by investor, we see the share of low and negative equity borrowers in forbearance is much higher among FHA/VA loans. This segment – which has the highest forbearance rates overall – sees 19% of homeowners holding 10% or less equity in their homes.

“Despite 25% of the workforce filing for unemployment benefits, just 9% of mortgages are currently in forbearance. Further, in April, nearly half of homeowners in forbearance plans made their April mortgage payments. Just 22% of those in forbearance as of May 26 have made their May payment, signaling another rise in the national delinquency rate is likely to be reflected in May’s data. With expanded unemployment benefits set to end on July 31, it remains to be seen what impact that may have on both forbearance requests and overall delinquencies.”
emphasis added

Click on graph for larger image.

Here is a graph from the Mortgage Monitor that shows the National Delinquency Rate.

From Black Knight:

• Just three months after hitting a record low in January 2020, the national delinquency rate is now at its highest level since 2013

• After falling more than 1.5% below its pre-Great Recession average in early 2020, the national delinquency rate is now 2.25% above that benchmark and may be poised to climb higher in May

• April's rise - the largest single-month increase on record - was nearly 3X the previous record from November 2008, during the heart of the Great Recession

• During the Great Recession, it took more than two years for the national delinquency rate to increase by the 3.1% seen in April 2020 alone

The second graph shows the number of active forbearance plans:

• As of May 26th, the number of active forbearances had begun to flatten, with a net increase of 7,000 plans over the prior week

• That’s compared to a 325K net increase in the first week of May, and 1.4M in the first week of April

• In total, an estimated 4.76M homeowners (representing 9% of active first lien mortgages) were in forbearance as of May 26th

There is much more in the mortgage monitor.

by Calculated Risk on 6/08/2020 10:33:00 AM

Note: Las Vegas saw a significant decline in visitor and convention traffic due to COVID-19 in the 2nd half of March and in April. This report is for closed sales in May; sales are counted at the close of escrow, so the contracts for these homes were mostly signed in March and April.

The Las Vegas Realtors reported Southern Nevada home prices holding their ground during crisis, LVR housing statistics for May 2020

LVR reported that a total of 2,075 existing local homes, condos and townhomes were sold during May – the second full month since Nevadans were ordered on March 17 to “stay home for Nevada.” Compared to the same time last year, May sales were down 48.1% for homes and down 51.3% for condos and townhomes. Sales were also down from the previous month.
...
By the end of May, LVR reported 5,799 single-family homes listed for sale without any sort of offer. That’s down 26.2% from one year ago. For condos and townhomes, the 1,768 properties listed without offers in May represented a 5.8% drop from one year ago.
…
Despite the coronavirus crisis, the number of so-called distressed sales in May remained near historically low levels. The association reported that short sales and foreclosures combined accounted for 1.5% of all existing local property sales in May. That compares to 2.0% of all sales one year ago, 2.6% two years ago, and 6.8% three years ago.
emphasis added

1) Overall sales were down 48.7% year-over-year to 2,075 in May 2020 from 4,045 in May 2019.

2) Active inventory (single-family and condos) is down from a year ago, from a total of 9,261 in May 2019 to 7,567 in May 2020. Note: Total inventory was down 22.2% year-over-year.   And months of inventory is still low.

3) Low level of distressed sales.

by Calculated Risk on 6/08/2020 08:11:00 AM

These indicators are mostly for travel and entertainment - some of the sectors that will probably recover very slowly.

The TSA is providing daily travel numbers.

Click on graph for larger image.

This data shows the daily total traveler throughput from the TSA for 2019 (Blue) and 2020 (Red).

On June 7th there were 441,255 travelers compared to 2,669,860 a year ago.

That is a decline of 83.5%. There has been an increase off the bottom, but air travel is still down significantly.

The second graph shows the year-over-year change in diners as tabulated by OpenTable for the US and several selected cities.

Thanks to OpenTable for providing this restaurant data:

This data is updated through June 6, 2020.

The US was off 100% YoY as of March 21st.

New York is still off 98%.

Texas is only down 46% YoY.

This data shows domestic box office for each week (red) and the maximum and minimum for the previous four years.  Data is from BoxOfficeMojo through June 4th.

Note that the data is noisy and depends on when blockbusters are released.

Movie ticket sales have picked up slightly, but have been essentially at zero for eleven weeks.

Most  movie theaters are closed all across the country, and will probably reopen slowly (probably with limited seating at first).

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

The red line is for 2020, dash light blue is 2019, blue is the median, and black is for 2009 (the worst year probably since the Great Depression for hotels).

2020 was off to a solid start, however, COVID-19 has crushed hotel occupancy.

Notes: Y-axis doesn't start at zero to better show the seasonal change.

STR reported hotel occupancy was off 43.2% year-over-year last week.  Occupancy has increased somewhat over the last few of weeks, but is still very low.

This graph, based on weekly data from the U.S. Energy Information Administration (EIA), shows the year-over-year change in gasoline consumption.

At one point, gasoline consumption was off almost 50% YoY.

As of May 29th, gasoline consumption was off about 20% YoY (about 80% of normal).

The final graph is from Apple mobility.

This data is through June 6th for the United States and several selected cities.

IMPORTANT: All data is relative to January 13, 2020. This data is NOT Seasonally Adjusted. People walk and drive more when the weather is nice, so I'm just using the transit data.

According to the Apple data public transit in the US is still only about 41% of the January level. It is at 26% in New York, and 64% in Houston.

by Calculated Risk on 6/07/2020 06:53:00 PM

Weekend:
• Schedule for Week of June 7, 2020

Monday:
• No major economic releases scheduled.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are up 10 and DOW futures are up 120 (fair value).

Oil prices were up over the last week with WTI futures at $39.72 per barrel and Brent at $42.69 barrel.  A year ago, WTI was at $53, and Brent was at $67 - so WTI oil prices are down about 25% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.03 per gallon. A year ago prices were at $2.75 per gallon, so gasoline prices are down $0.72 per gallon year-over-year.

by Calculated Risk on 6/07/2020 06:30:00 PM

Note: I started posting this graph when the US was doing a few thousand tests per day. Clearly the US was way under testing early in the pandemic. I'll continue posting this graph daily until the percent positive is continuously under 3% (still have a ways to go).

The US is now conducting over 400,000 tests per day, and that might be enough to allow test-and-trace in some areas. Based on the experience of other countries, the percent positive needs to be well under 5% to really push down new infections, so the US still needs to increase the number of tests per day significantly.

According to Dr. Jha of Harvard's Global Health Institute, the US might need more than 900,000 tests per day .

There were 456,805 test results reported over the last 24 hours.

Click on graph for larger image.

This data is from the COVID Tracking Project.

The percent positive over the last 24 hours was 4.4% (red line).

For the status of contact tracing by state, check out testandtrace.com.

by Calculated Risk on 6/07/2020 10:49:00 AM

The FOMC will meet this week on Tuesday and Wednesday, and expectations are for no change in policy. Fed Chair Powell will hold a press briefing on Wednesday and will likely reiterate that the Fed will do whatever it takes, and suggest that more fiscal disaster relief is needed.

The FOMC is expected to release updated projections at the meeting this week (this is not certain).  The FOMC didn't release projections in March due to economic uncertainty related to the impact of COVID-19.

For review, here are the last FOMC projections released in December.   Since the last projections were released, the economic world has changed dramatically - coming to a sudden stop in March - and the projections for 2020 and 2021 will change significantly.

GDP decreased at a 5.0% annual rate in Q1, and most forecasts are for an annual rate decline of 30% to 40% in Q2 - and for GDP to decline in 2020.

The course of the economy will depend on the course of the pandemic, so the FOMC has to factor in their expectations of when the pandemic will subside and end (and no one knows at this time).

GDP projections of Federal Reserve Governors and Reserve Bank presidents, Change in Real GDP1
Projection Date	2020	2021	2022
Dec 2019	2.0 to 2.2	1.8 to 2.0	1.8 to 2.0
June 2020	NA	NA	NA

¹ Projections of change in real GDP and inflation are from the fourth quarter of the previous year to the fourth quarter of the year indicated.

The unemployment rate was at 13.3% in May.   The FOMC will revise up their Q4 2020 unemployment forecast significantly.   The FOMC projections for the unemployment rate at the end of 2020, 2021 and 2022 will be interesting.

Note that the unemployment rate doesn't remotely capture the economic damage to the labor market.  Not only were there 15+ million more people unemployed in May than at the end of 2019, but another 6+ million have left the labor force.   And close to 50% of households have seen a decline in income.

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents, Unemployment Rate2
Projection Date	2020	2021	2022
Dec 2019	3.5 to 3.7	3.5 to 3.9	3.5 to 4.0
June 2020	NA	NA	NA

² Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.

As of April 2020, PCE inflation was up 0.5% from April 2019.   With the economic stop in March, PCE inflation will be revised down significantly for Q4 2020.

Inflation projections of Federal Reserve Governors and Reserve Bank presidents, PCE Inflation1
Projection Date	2020	2021	2022
Dec 2019	1.8 to 1.9	2.0 to 2.1	2.0 to 2.2
June 2020	NA	NA	NA

PCE core inflation was up 1.0% in April year-over-year.    Core inflation will also be revised down for Q4 2020.

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents, Core Inflation1
Projection Date	2020	2021	2022
Dec 2019	1.9 to 2.0	2.0 to 2.1	2.0 to 2.2
June 2020	NA	NA	NA