by Calculated Risk on 9/11/2020 06:42:00 PM

The US is now mostly reporting over 700,000 tests per day. 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 (or take actions to push down the number of new infections).

There were 765,997 test results reported over the last 24 hours.

There were 44,927 positive tests.

See the graph on US Daily Deaths here.

Click on graph for larger image.

This data is from the COVID Tracking Project.

The percent positive over the last 24 hours was 5.9% (red line).

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

And check out COVID Exit Strategy to see how each state is doing.

The second graph shows the 7 day average of positive tests reported.

The dashed line is the June low.

Note that there were very few tests available in March and April, and many cases were missed (the percent positive was very high - see first graph).

By June, the percent positive had dropped below 5% (lower than today).  If people stay vigilant, the number of cases might drop to the June low by the end of September (that would still be a large number of new cases, but progress).

by Calculated Risk on 9/11/2020 01:32:00 PM

Note: Both Black Knight and the MBA (Mortgage Bankers Association) are putting out weekly estimates of mortgages in forbearance.

This data is as of September 8th.

From 1.7M Forbearance Plans Set to Expire in September

Improvement in the number of active forbearance plans continued this past week. Entering the month, more than 2M forbearance plans were set to expire in September.

That number’s already down 350K to 1.7M in the first full week of the month as those expirations begin to be assessed for extensions and removals.

After dropping by nearly 150K last week, the total number of mortgages in active forbearance declined another 66K (-2%) this week.
...
All in all, active forbearances are now down 238K (-6%) over the past 30 days, as servicers continue to proactively work their way through the wave of forbearance plans set to expire in September.

As of September 8, 3.7M homeowners remain in COVID-19-related forbearance plans. That’s down more than 22% from the peak of over 4.7M in late May
emphasis added

Click on graph for larger image.

CR Note: We might see an increase in forbearance requests in September without further relief, although the lack of disaster relief is probably hitting renters harder.

by Calculated Risk on 9/11/2020 11:29:00 AM

From Merrill Lynch:

We revise up our 3Q GDP forecast to 27% qoq saar from 15% previously, but take down 4Q to 3.0% qoq saar from 5.0%. 2Q GDP is tracking -31.6% qoq saar. [Sept 11 estimate]
emphasis added

From Goldman Sachs:

We left our Q3 GDP tracking estimate unchanged at +35% (qoq ar). [Sept 10 estimate]

From the NY Fed Nowcasting Report

The New York Fed Staff Nowcast stands at 15.6% for 2020:Q3 and 7.3% for 2020:Q4. [Sept 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 2020 is 30.8 percent on September 10, up from 29.6 percent on September 3. [Sept 10 estimate]

It is important to note that GDP is reported at a seasonally adjusted annual rate (SAAR).  A 30% annualized increase in Q3 GDP, is about 6.8% QoQ, and would leave real GDP down about 4.2% from Q4 2019.

The following graph illustrates this decline.

Click on graph for larger image.

This graph shows the percent decline in real GDP from the previous peak (currently the previous peak was in Q4 2019).

This graph is through Q2 2020, and real GDP is currently off 10.2% from the previous peak.  For comparison, at the depth of the Great Recession, real GDP was down 4.0% from the previous peak.

The black arrow shows what a 30% annualized increase in real GDP would look like in Q3.

Even with a 30% annualized increase (about 6.8% QoQ), real GDP will be down about 4.2% from Q4 2019; a larger decline in real GDP than at the depth of the Great Recession.

by Calculated Risk on 9/11/2020 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% August. The 16% trimmed-mean Consumer Price Index rose 0.3% in August. "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".

Note: The Cleveland Fed released the median CPI details for August here. Used cars and trucks increased at a 88% annualized rate in August.

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 2.7%, the trimmed-mean CPI rose 2.5%, and the CPI less food and energy rose 1.7%. Core PCE is for July and increased 1.3% year-over-year.

Even with the increases in inflation in July and August, overall inflation will not be a concern during the crisis.

by Calculated Risk on 9/11/2020 08:40:00 AM

The BLS reported this morning:

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 1.4 percent over the last 12 months to an index level of 253.597 (1982-84=100). For the month, the index rose 0.4 percent prior to seasonal adjustment.

CPI-W is the index that is used to calculate the Cost-Of-Living Adjustments (COLA). The calculation dates have changed over time (see Cost-of-Living Adjustments), but the current calculation uses the average CPI-W for the three months in Q3 (July, August, September) and compares to the average for the highest previous average of Q3 months. Note: this is not the headline CPI-U, and is not seasonally adjusted (NSA).

• In 2019, the Q3 average of CPI-W was 250.200.

The 2019 Q3 average was the highest Q3 average, so we only have to compare Q3 this year to last year.

Click on graph for larger image.

This graph shows CPI-W since January 2000. The red lines are the Q3 average of CPI-W for each year.

Note: The year labeled for the calculation, and the adjustment is effective for December of that year (received by beneficiaries in January of the following year).

CPI-W was up 1.4% year-over-year in August, and although this is very early - we need the data for September - my current guess is COLA will increase over 1% this year, but lower than the 1.6% last year, and the smallest increase since 2016.

Contribution and Benefit Base

The contribution base will be adjusted using the National Average Wage Index. This is based on a one year lag. The National Average Wage Index is not available for 2019 yet, but wages probably increased again in 2019. If wages increased the same as in 2018, then the contribution base next year will increase to around $142,700 in 2021, from the current $137,700.

Remember - this is an early look. What matters is average CPI-W for all three months in Q3 (July, August and September).

by Calculated Risk on 9/11/2020 08:32:00 AM

From the BLS:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent in August on a seasonally adjusted basis after rising 0.6 percent in July, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.3 percent before seasonal adjustment.

The monthly increase in the seasonally adjusted all items index was broad-based; a sharp rise in the used cars and trucks index was the largest factor, but the indexes for gasoline, shelter, recreation, and household furnishings and operations also contributed. ...

The index for all items less food and energy rose 0.4 percent in August after increasing 0.6 percent in July. ...

The all items index increased 1.3 percent for the 12 months ending August; this figure has been rising since the period ending May 2020, when the 12-month increase was 0.1 percent. The index for all items less food and energy increased 1.7 percent over the last 12 months.
emphasis added

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

by Calculated Risk on 9/10/2020 09:00:00 PM

Friday:
• At 8:30 AM ET, The Consumer Price Index for August from the BLS. The consensus is for a 0.3% increase in CPI, and a 0.2% increase in core CPI.

by Calculated Risk on 9/10/2020 06:28:00 PM

The US is now mostly reporting over 700,000 tests per day. 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 (or take actions to push down the number of new infections).

There were 614,042 test results reported over the last 24 hours.

There were 37,581 positive tests.

See the graph on US Daily Deaths here.

Click on graph for larger image.

This data is from the COVID Tracking Project.

The percent positive over the last 24 hours was 6.1% (red line).

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

And check out COVID Exit Strategy to see how each state is doing.

The second graph shows the 7 day average of positive tests reported.

The dashed line is the June low.

Note that there were very few tests available in March and April, and many cases were missed (the percent positive was very high - see first graph).

By June, the percent positive had dropped below 5% (lower than today).  If people stay vigilant, the number of cases might drop to the June low by the end of September (that would still be a large number of new cases, but progress).

by Calculated Risk on 9/10/2020 04:27:00 PM

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

Boosted in part by Labor Day weekend, U.S. hotel occupancy increased slightly over the previous week, according to the latest data from STR.

30 August through 5 September 2020 (percentage change from comparable week in 2019):

• Occupancy: 49.4% (-18.9%)
• Average daily rate (ADR): US$100.97 (-17.1%)
• Revenue per available room (RevPAR): US$49.87 (-32.8%)

Hotel demand grew to 18 million room nights sold (+500,000 week over week). Saturday (5 September) occupancy came in at 69.0%, just 2.6% less than the comparable Saturday in 2019, and leisure markets that have showed the highest summer occupancy levels reported strong increases from the previous weekend. At the same time, the markets with the highest occupancy for the week were not leisure destinations. Rather, the high occupancy markets were those housing displaced residents from Hurricane Laura and the California wildfires.
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 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).

The leisure travel season usually peaks at the beginning of August, and then the occupancy rate typically declines sharply in the Fall.   However, with so many schools closed (or openings delayed), the leisure travel season lasted longer than usual this year.  It seems unlikely business travel will pickup significantly in the Fall.

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

by Calculated Risk on 9/10/2020 12:50:00 PM

From the HAR: Houston Real Estate Registers Another Strong Performance in August

Following a July that vaulted Houston real estate into the record books, August proved to be another healthy month for home sales despite the lingering coronavirus pandemic. The high end of the market staged the strongest performance, pulling up overall pricing along the way. However, with a decline in the number of listings for sale coming on the market, inventory has now fallen to its lowest level in five years, setting the stage for moderating sales in the weeks ahead despite historically low interest rates.

According to the latest Houston Association of Realtors (HAR) Market Update, 9,195 single-family homes sold in August compared to 8,673 a year earlier. That accounted for a 6.0 percent increase and marked the third consecutive month of positive sales.
...
Sales of all property types totaled 11,121 – up 7.3 percent from August 2019. Total dollar volume for the month increased 13.4 percent to $3.5 billion. After strong consumer interest in July, the lease market retreated in August, with declines in both the single-family and townhouse/condo markets.
emphasis added

Inventory declined 23.0% year-over-year from 44,369 in August 2019 to 34,181 in August 2020.

Note that the closed sales in August were for contracts that were mostly signed in June and July.