by Calculated Risk on 6/10/2020 11:15:00 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 0.3% (3.2% annualized rate) in May. The 16% trimmed-mean Consumer Price Index rose 0.2% (2.5% 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 fell 0.1% (-0.6% annualized rate) in May. The CPI less food and energy fell 0.1% (-0.7% annualized rate) on a seasonally adjusted basis.

Note: The Cleveland Fed released the median CPI details for May here. Motor fuel decreased at a 35% annualized rate in May.

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 2.8%, the trimmed-mean CPI rose 2.3%, and the CPI less food and energy rose 1.2%. Core PCE is for April and increased 1.0% year-over-year.

Inflation will not be a concern during the crisis.  Interesting, both the median CPI and trimmed-mean CPI actually increased in May.

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

From the BLS:

The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.1 percent in May on a seasonally adjusted basis after falling 0.8 percent in April, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 0.1 percent before seasonal adjustment.

Declines in the indexes for motor vehicle insurance, energy, and apparel more than offset increases in food and shelter indexes to result in the monthly decrease in the seasonally adjusted all items index. The gasoline index declined 3.5 percent in May, leading to a 1.8-percent decline in the energy index. The food index, in contrast, increased 0.7 percent in May as the index for food at home rose 1.0 percent.

The index for all items less food and energy fell 0.1 percent in May, its third consecutive monthly decline. This is the first time this index has ever declined in three consecutive months. Along with motor vehicle insurance and apparel, the indexes for airline fares and used cars and trucks declined in May. The indexes for shelter, recreation, medical care, household furnishings and operations, and new vehicles all increased.

The all items index increased 0.1 percent for the 12 months ending May. The index for all items less food and energy increased 1.2 percent over the last 12 months; this compares to a 2.4-percent increase a few months ago (the period ending February).
emphasis added

Overall inflation was at expectations in May. I'll post a graph later today after the Cleveland Fed releases the median and trimmed-mean CPI.

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

From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey

Mortgage applications increased 9.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 5, 2020. The previous week’s results included an adjustment for the Memorial Day holiday.

... The Refinance Index increased 11 percent from the previous week and was 80 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 5 percent from one week earlier. The unadjusted Purchase Index increased 15 percent compared with the previous week and was 13 percent higher than the same week one year ago.
...
“Fueled again by low mortgage rates, pent-up demand from earlier this spring, and states reopening across the country, purchase mortgage applications and refinances both increased. The recovery in the purchase market continues to gain steam, with the seasonally adjusted index rising to its highest level since January. Purchase activity increased for the eighth straight week and was a notable 13 percent higher than a year ago,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Refinances moved higher for the first time in nearly two months, with both conventional and government applications rising and the overall index coming in 80 percent above year-ago levels.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased to 3.38 percent from 3.37 percent, with points remaining unchanged at 0.30 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Click on graph for larger image.


The first graph shows the refinance index since 1990.

The refinance index has been very volatile recently depending on rates and liquidity.

But the index is up signficantly from last year.

The second graph shows the MBA mortgage purchase index

According to the MBA, purchase activity is up 13% year-over-year.

Note: Red is a four-week average (blue is weekly).

by Calculated Risk on 6/09/2020 08:58:00 PM

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

• At 8:30 AM, The Consumer Price Index for May from the BLS. The consensus is for 0.1% decrease in CPI, and a 0.1% decrease in core CPI.

• At 2:00 PM, FOMC Meeting Announcement. No change to policy is expected at this meeting.

• At 2:00 PM, FOMC Forecasts This will include the Federal Open Market Committee (FOMC) participants' projections of the appropriate target federal funds rate along with the quarterly economic projections.

• At 2:30 PM, Fed Chair Jerome Powell holds a press briefing following the FOMC announcement.

by Calculated Risk on 6/09/2020 06:56:00 PM

Here is a video of the economic outlook by Professor Schwarz and me.

by Calculated Risk on 6/09/2020 05:31:00 PM

First some local news (Orange County, CA) from CBS: Orange County Health Officer Nichole Quick Resigns After Facing Threats For Issuing Face Mask Order

And here is some local data. New record COVID-19 patients in the ICU (now about 20% of ICU beds are being used for COVID patients. Still needs some beds of other patients) and record number of COVID patients hospitalized in Orange County.

This graph is from OC Health Department.  This shows the number of hospitalizations and COVID-19 patients in the ICU.

The trend is not our friend.

This is very sad news too about Dr. Quick - the modern day anti-mask league is trying to hurt everyone.

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 432,880 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 4.2% (red line).

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

by Calculated Risk on 6/09/2020 12:22:00 PM

From the NMHC: NMHC Rent Payment Tracker Finds 80.8 Percent of Apartment Households Paid Rent as of June 6

The National Multifamily Housing Council (NMHC)’s Rent Payment Tracker found 80.8 percent of apartment households made a full or partial rent payment by June 6 in its survey of 11.5 million units of professionally managed apartment units across the country.

This is a 0.7-percentage point decrease in the share who paid rent through June 6, 2019 and compares to 80.2 percent that had paid by May 6, 2020. These data encompass a wide variety of professionally managed market-rate rental properties across the United States, which can vary by size, type and average rental price.

“These are trying times for the country, and we are reminded on a regular basis how crucial safe and secure housing is during a period of uncertainty and upheaval, so we are glad to see that residents who live in professionally managed properties continue to pay their rent,” said Doug Bibby, NMHC President. “While our Rent Payment Tracker metric continues to show the resilience and strength of the professionally managed apartment industry, it does not necessarily tell the whole story, as it doesn’t capture rent payments for smaller landlords or for affordable and subsidized properties, and according to Harvard, more than half of renters with at-risk wages due to the pandemic live in single-family and small multifamily rentals with 2–4 units.”

“At the beginning of the outbreak lawmakers took swift action to extend and enhance unemployment benefits as well as create other programs aimed at keeping individuals employed. Thanks to those forward-looking steps, millions of Americans have been able to continue to be able to afford healthcare, food and shelter,” said David Schwartz, NMHC Chair, and CEO and Chairman of Chicago-based Waterton. “However, those benefits will expire on July 31. Unless policymakers move to extend them, the families and individuals relying on them will find themselves without a safety net, undercutting the initial economic recovery. We urge lawmakers in both parties to continue to sustain and support Americans as our nation and the economy begin to recover.”
emphasis added

CR Note: It appears people are still paying their rent at about the same rate as last year (down just 0.7 percentage points from a year ago).   The disaster relief has been key to helping people pay their bills, especially the extra unemployment benefits and the PPP.  

by Calculated Risk on 6/09/2020 10:08:00 AM

From the BLS: Job Openings and Labor Turnover Summary

The number of total separations decreased by 4.8 million to 9.9 million in April, the U.S. Bureau of Labor Statistics reported today. Despite the over the month decline, the total separations level is the second highest in series history. Within separations, the quits rate fell to 1.4 percent and the layoffs and discharges rate decreased to 5.9 percent. Job openings decreased to 5.0 million on the last business day of April. Over the month, hires declined to 3.5 million, a series low. The changes in these measures reflect the effects of the coronavirus (COVID-19) pandemic and efforts to contain it ...
emphasis added

The following graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

This series started in December 2000.

Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for April, the most recent employment report was for May.

Click on graph for larger image.


Note that hires (dark blue) and total separations (red and light blue columns stacked) are usually pretty close each month. This is a measure of labor market turnover.  When the blue line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs.

Jobs openings decreased in April to 5.046 million from 6.011 million in March.

The number of job openings (yellow) were down 31% year-over-year.

Quits were down 49% year-over-year. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").

Job openings decreased sharply in April, and hires were at a series low.  Quits declined almost 50% YoY - as expected, a very weak report.

by Calculated Risk on 6/09/2020 08:22:00 AM

Most of this survey is noise, but there is some information, especially on the labor market.

From the National Federation of Independent Business (NFIB): May 2020 Report

The Small Business Optimism Index increased 3.5 points in May to 94.4, a strong improvement from April’s 90.9 reading. Eight of the 10 Index components improved in May and two declined. The NFIB Uncertainty Index increased seven points to 82. Reports of expected business conditions in the next six months increased 5 points to a net 34%, following a 24-point increase in April. Owners are optimistic about future business conditions and expect the recession to be short-lived.
.
May Survey respondents reduced employment by 0.17 workers per firm in the prior three months, down from an addition of 0.09 workers per firm in the April report. … May’s survey was bad news for job creation. A seasonally-adjusted net 8 percent plan to create new jobs, up 7 points.
emphasis added

Note that the "single biggest problem" is "poor sales".

Click on graph for larger image.

This graph shows the small business optimism index since 1986.

The index increased to 94.4 in May.

by Calculated Risk on 6/08/2020 08:47:00 PM

From Matthew Graham at Mortgage News Daily: Mortgage Rates Starting Strong This Week

After moving higher at a fairly quick pace last by last Friday, mortgage rates are off to a better start this week. Rates remain noticeably higher versus the best recent levels, seen on June 1st and 2nd, but the average lender offered slightly lower rates this morning and then ended up offering a mid-day price improvement as well. [30YR FIXED - 3.19%]
emphasis added

Tuesday:
• At 6:00 AM ET, NFIB Small Business Optimism Index for May.

• At 10:00 AM, Job Openings and Labor Turnover Survey for April from the BLS.

• At 2:30 PM, (11:30 AM PT) June 2020 Market & Economic Update. Free Registration Link for June 2020 Market & Economic Update.