by Calculated Risk on 1/03/2021 07:08:00 PM

Note: It will take a week or so for the data to adjust for lack of reporting during the holidays. Several states didn't report today. The week-over-week growth in positive cases slowed prior to the holidays.  Hopefully that continues after the holidays.

I'm looking forward to not posting this data in a few months.

The US is now averaging close to 2 million tests per day. Based on the experience of other countries, for adequate test-and-trace (and isolation) to reduce infections, the percent positive needs to be under 5% (probably close to 1%), so the US has far too many daily cases - and percent positive - to do effective test-and-trace.

There were 1,424,180 test results reported over the last 24 hours.

There were 204,805 positive tests.

Over 6,000 US deaths have been reported so far in January. 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 14.4% (red line is 7 day average).  The percent positive is calculated by dividing positive results by total tests (including pending).

And check out COVID Act Now to see how each state is doing. (updated link to new site)

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


• Record Hospitalizations

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by Calculated Risk on 1/03/2021 12:43:00 PM

There were four bank failures in 2020. This was the same number as in 2019. The median number of failures since the FDIC was established in 1933 was 7 - so 4 failures in 2020 was below the median.

The great recession / housing bust / financial crisis related failures have been behind us for several years.

The first graph shows the number of bank failures per year since the FDIC was founded in 1933.

Click on graph for larger image.

Typically about 7 banks fail per year.

Note: There were a large number of failures in the '80s and early '90s. Many of these failures were related to loose lending, especially for commercial real estate.  Also, a large number of the failures in the '80s and '90s were in Texas with loose regulation.

Even though there were more failures in the '80s and early '90s than during the financial crisis, the financial crisis was much worse (larger banks failed and were bailed out).

The second graph includes pre-FDIC failures. In a typical year - before the Depression - 500 banks would fail and the depositors would lose a large portion of their savings.

Then, during the Depression, thousands of banks failed. Note that the S&L crisis and recent financial crisis look small on this graph.

by Calculated Risk on 1/03/2021 10:16:00 AM

The FDIC's official problem bank list is comprised of banks with a CAMELS rating of 4 or 5, and the list is not made public (just the number of banks and assets every quarter). Note: Bank CAMELS ratings are also not made public.

CAMELS is the FDIC rating system, and stands for Capital adequacy, Asset quality, Management, Earnings, Liquidity and Sensitivity to market risk. The scale is from 1 to 5, with 1 being the strongest.

As a substitute for the CAMELS ratings, surferdude808 is using publicly announced formal enforcement actions, and also media reports and company announcements that suggest to us an enforcement action is likely, to compile a list of possible problem banks in the public interest.

DISCLAIMER: This is an unofficial list, the information is from public sources only, and while deemed to be reliable is not guaranteed. No warranty or representation, expressed or implied, is made as to the accuracy of the information contained herein and same is subject to errors and omissions. This is not intended as investment advice. Please contact CR with any errors.

Here is the unofficial problem bank list for Q4 2020.

Here are the monthly changes and a few comments from surferdude808:

Update on the Unofficial Problem Bank List through December 31, 2020. Since the last update at the end of October 2020, the list increased by one to 65 institutions after one addition. Assets increased by $1.5 billion to $58.2 billion, with $1.3 billion of the increase from updated asset figures through September 30, 2020. A year ago, the list held 67 institutions with assets of $51.1 billion. Added this month was the Business Bank of Texas, N.A., Austin, TX ($115 million). On December 1, 2020, the FDIC released third quarter results and an update on the Official Problem Bank List. In that release, the FDIC said there were 56 institutions with assets of $53.9 billion on the official list, up from 52 institutions with assets of $48.1 billion at the second quarter of 2020.

With the conclusion of the fourth quarter, we bring an updated transition matrix to detail how banks are transitioning off the Unofficial Problem Bank List. Since we first published the Unofficial Problem Bank List on August 7, 2009 with 389 institutions, 1,768 institutions have appeared on a weekly or monthly list since then. Only 3.7 percent of the banks that have appeared on a list remain today as 1,703 institutions have transitioned through the list. Departure methods include 1,003 action terminations, 411 failures, 270 mergers, and 19 voluntary liquidations. Of the 389 institutions on the first published list, only 3 or less than 1.0 percent, still have a troubled designation more than ten years later. The 411 failures represent 23.2 percent of the 1,768 institutions that have made an appearance on the list. This failure rate is well above the 10-12 percent rate frequently cited in media reports on the failure rate of banks on the FDIC's official list.

by Calculated Risk on 1/02/2021 07:35:00 PM

Note: It will take a week or so for the data to adjust for lack of reporting during the holidays. The week-over-week growth in positive cases slowed prior to the holidays.  Hopefully that continues after the holidays.

I'm looking forward to not posting this data in a few months.

The US is now averaging close to 2 million tests per day. Based on the experience of other countries, for adequate test-and-trace (and isolation) to reduce infections, the percent positive needs to be under 5% (probably close to 1%), so the US has far too many daily cases - and percent positive - to do effective test-and-trace.

There were 2,062,082 test results reported over the last 24 hours.

There were 275,897 positive tests.

Almost 5,000 US deaths have been reported so far in January. 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 13.4% (red line is 7 day average).  The percent positive is calculated by dividing positive results by total tests (including pending).

And check out COVID Act Now to see how each state is doing. (updated link to new site)

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

by Calculated Risk on 1/02/2021 12:03:00 PM

Earlier I posted some questions for the new year: Ten Economic Questions for 2021. I'm adding some thoughts, and maybe some predictions for each question.

1) Economic growth: Economic growth was probably around negative 3% in 2020 due to the pandemic (maybe 2.5% Q4 over Q4). The FOMC is expecting growth of 3.7% to 5.0% Q4-over-Q4 in 2021. How much will the economy grow in 2021?

Here is a table of the annual change in real GDP since 2005.  Prior to the pandemic, economic activity was mostly in the 2% range since 2010.  Given current demographics, that is about what we'd expect: See: 2% is the new 4%., although demographics are improving somewhat (more prime age workers).

Note: This table includes both annual change and q4 over the previous q4 (two slightly different measures).   For 2020, I used a 5.0% annual growth rate in Q4 2020 (this gives -2.2% Q4 over Q4 or -3.4% real annual growth).

Real GDP Growth
Year	Annual GDP	Q4 / Q4
2005	3.5%	3.1%
2006	2.9%	2.6%
2007	1.9%	2.0%
2008	-0.1%	-2.8%
2009	-2.5%	0.2%
2010	2.6%	2.6%
2011	1.6%	1.6%
2012	2.2%	1.5%
2013	1.8%	2.6%
2014	2.5%	2.9%
2015	3.1%	2.2%
2016	1.7%	2.1%
2017	2.3%	2.7%
2018	3.0%	2.5%
2019	2.2%	2.3%
20201	-3.4%	-2.2%
1 2020 estimate based on 5.0% Q4 SAAR annualized real growth rate

The FOMC is projecting real GDP growth of 3.7% to 5.0% in 2021 (Q4 over Q4).

Goldman Sachs recently projected real "GDP growth of +5.9% in 2021".

Merrill Lynch recently projected 4.6% real GDP growth in 2021.

GDP growth in 2021 depends on how quickly the pandemic subsides (I'm assuming mid-year), and how much economic scarring has occurred (permanent job losses, business closings, commercial real estate issues).  With minimal scarring, GDP could return to path growth (about 2.3% per year real GDP growth).   That would put GDP up 7% or so in 2021 (Q4 over Q4).

My guess is there are certain sectors that will be slow to recover, and some - like some sectors of commercial real estate - that will barely contribute to growth in 2021.  These factors suggest real GDP growth probably in the 4.5% to 5.5% range in 2021, with some upside potential (and downside risk if the pandemic persists).

Here are the Ten Economic Questions for 2021 and a few predictions:

• Question #1 for 2021: How much will the economy grow in 2021?
• Question #2 for 2021: Will all the jobs lost in 2020 return in 2021, or will job growth be sluggish?
• Question #3 for 2021: What will the unemployment rate be in December 2021?
• Question #4 for 2021: Will the overall participation rate increase to pre-pandemic levels (63.4% in February 2020) , or will it will only partially recover in 2021?
• Question #5 for 2021: Will the core inflation rate increase in 2021? Will too much inflation be a concern in 2021?
• Question #6 for 2021: Will the Fed raise rates in 2021? What about the asset purchase program?
• Question #7 for 2021: How much will RI increase in 2021? How about housing starts and new home sales in 2021?
• Question #8 for 2021: What will happen with house prices in 2021?
• Question #9 for 2021: Will inventory increase as the pandemic subsides, or will inventory decrease further in 2021?
• Question #10 for 2021: How much damage did the pandemic do to certain sectors?

by Calculated Risk on 1/02/2021 08:11:00 AM

The key report this week is the December employment report on Friday.

Other key indicators include the December ISM manufacturing and services indexes, December vehicle sales, and the November trade deficit.

----- Monday, Jan 4th -----
10:00 AM: Construction Spending for November. The consensus is for a 0.9% increase in construction spending.

All day: Light vehicle sales for December. Sales were at 15.55 million in November (Seasonally Adjusted Annual Rate).

This graph shows light vehicle sales since the BEA started keeping data in 1967. The dashed line is the November sales rate.

----- Tuesday, Jan 5th -----
8:00 AM ET: Corelogic House Price index for November.

10:00 AM: ISM Manufacturing Index for December. The consensus is for the ISM to be at 56.5, down from 57.5 in November.

----- Wednesday, Jan 6th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:15 AM: The ADP Employment Report for December. This report is for private payrolls only (no government). The report showed 307,000 jobs added in November.

----- Thursday, Jan 7st -----
8:30 AM: The initial weekly unemployment claims report will be released. 

8:30 AM: Trade Balance report for November from the Census Bureau.

This graph shows the U.S. trade deficit, with and without petroleum, through the most recent report. The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

The consensus is the trade deficit to be $64.5 billion.  The U.S. trade deficit was at $63.1 billion in October.

10:00 AM: the ISM non-Manufacturing Index for December.

----- Friday, Jan 8th -----
8:30 AM: Employment Report for December.   There were 245 thousand jobs added in November, and the unemployment rate was at 6.7%.

This graph shows the job losses from the start of the employment recession, in percentage terms.

The current employment recession was by far the worst recession since WWII in percentage terms, and the worst in terms of the unemployment rate.

by Calculated Risk on 1/01/2021 07:26:00 PM

Note: It will take a week or so for the data to adjust for the holidays. The week-over-week growth in positive cases slowed prior to the holidays.  Hopefully that continues after the holidays.

I'm looking forward to not posting this data in a few months.

The US is now averaging close to 2 million tests per day. Based on the experience of other countries, for adequate test-and-trace (and isolation) to reduce infections, the percent positive needs to be under 5% (probably close to 1%), so the US has far too many daily cases - and percent positive - to do effective test-and-trace.

There were 1,239,502 test results reported over the last 24 hours.

There were 173,255 positive tests.

Over 2,500 US deaths have been reported so far in January. 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 14.0% (red line is 7 day average).  The percent positive is calculated by dividing positive results by total tests (including pending).

And check out COVID Act Now to see how each state is doing. (updated link to new site)

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

by Calculated Risk on 1/01/2021 03:34:00 PM

Earlier I posted some questions for the new year: Ten Economic Questions for 2021. I'm adding some thoughts, and maybe some predictions for each question.

2) Employment: Through November 2020, the economy lost 9.37 million jobs.   By April 2020, the economy had lost 21.7 million jobs, and then added back 12.33 million jobs by November.  But job growth slowed over the last few months.  Will all the jobs lost in 2020 return in 2021, or will job growth be sluggish?

For review, here is a table of the monthly change in total nonfarm jobs, and ex-Decennial Census.  Monthly job growth has been slowing, and was on 338 thousand, ex-Census in November.

Jobs Added per Month (000s), 2020
&nbsp	Total	ex-Census
Jan-20	214	209
Feb-20	251	244
Mar-20	-1,373	-1,390
Apr-20	-20,787	-20,792
May-20	2,725	2,740
Jun-20	4,781	4,785
Jul-20	1,761	1,734
Aug-20	1,493	1,255
Sep-20	711	752
Oct-20	610	758
Nov-20	245	338
Dec-20	---	---

Some early December forecasts suggest even further slowing, from Merrill Lynch economists:

"We forecast nonfarm payrolls growth of 50k in December after increasing by just 245k in November. We think government payrolls will likely decline by 25k in December as the few remaining temporary census workers roll off payrolls and additional education workers at the state and local level are furloughed due to stricter COVID-19 restrictions. This implies private payrolls should grow by only 75k in December, decelerating from a gain of 344k in November."

This will likely be a very difficult winter with the pandemic, and it seems likely job growth will be stunted for the next several months. If the pandemic subsides by mid-year, the monthly job gains should increase significantly.

With 3.7 million permanent job losers - about 2.5 million more than at the beginning of 2020 - it seems unlikely the economy will add back the remaining 9 million jobs lost within a year, and also add jobs for new entrants in 2021.  I think something like 6 to 8 million jobs could be added in 2021, but it will depend on ending the pandemic and appropriate fiscal policy.   

Here are the Ten Economic Questions for 2021 and a few predictions:

• Question #1 for 2021: How much will the economy grow in 2021?
• Question #2 for 2021: Will all the jobs lost in 2020 return in 2021, or will job growth be sluggish?
• Question #3 for 2021: What will the unemployment rate be in December 2021?
• Question #4 for 2021: Will the overall participation rate increase to pre-pandemic levels (63.4% in February 2020) , or will it will only partially recover in 2021?
• Question #5 for 2021: Will the core inflation rate increase in 2021? Will too much inflation be a concern in 2021?
• Question #6 for 2021: Will the Fed raise rates in 2021? What about the asset purchase program?
• Question #7 for 2021: How much will RI increase in 2021? How about housing starts and new home sales in 2021?
• Question #8 for 2021: What will happen with house prices in 2021?
• Question #9 for 2021: Will inventory increase as the pandemic subsides, or will inventory decrease further in 2021?
• Question #10 for 2021: How much damage did the pandemic do to certain sectors?

by Calculated Risk on 1/01/2021 11:58:00 AM

Earlier I posted some questions for the new year: Ten Economic Questions for 2021. I'm adding some thoughts, and maybe some predictions for each question.

3) Unemployment Rate: The unemployment rate was at 6.7% in November, up 3.2 percentage points year-over-year, but down from the peak of 14.7% in April.   Currently the FOMC is forecasting the unemployment rate will be in the 4.7% to 5.4% range in Q4 2021.  What will the unemployment rate be in December 2021?

First, the headline unemployment number significantly understates the current situation. Here is a table that shows the current number of unemployed and the unemployment rate (as of November). Then I calculated the unemployment rate by including the number of people that have left the labor force since early 2020, and the expected growth in the labor force.

	Number (000s)	Unemployment Rate
Unemployed	10,735	6.7%
Left Labor Force	4,139	9.0%
Expected Labor Force Growth	1,000	9.6%

As the economy recovers, many of the people that left the labor force will probably return, and there will likely be more entrants into the labor force (although recent demographic data has been dismal).   

Lets say the economy adds back 6 million jobs, in 2021, of the 9 million jobs still lost since early 2020.  Meanwhile 3 million of the remaining 4.1 million people that left the labor force return, and the labor force grows by 2 million over the two year period (2020 and 2021).   The unemployment rate would fall to 5.9% by December 2021 - above the high end of the FOMC forecast.

Here is a graph of the unemployment rate over time:

Click on graph for larger image.

There has been a quick bounce back in the unemployment rate from the peak unemployment rate in April.  

However job growth has slowed recently, and the winter months will probably see little progress.

Even after the pandemic subsides, there are areas of the economy that will only slowly return to normal.

The second graph shows the job losses from the start of the employment recession, in percentage terms.

The current employment recession is by far the worst recession since WWII in percentage terms, and is still worse than the worst of the "Great Recession".

It took several years to recover all the jobs lost following the 2001 and 2007 recessions, and that might happen again depending on fiscal policy, and how many permanent jobs were lost.

The third graph shows permanent job losers as a percent of the pre-recession peak in employment through the November report.

This data is only available back to 1994, so there is only data for three recessions.

In November, the number of permanent job losers increased to 3.743 million from 3.684 million in October.

The pandemic recession has already seen more permanent job losses than the 2001 recession.   It seems likely these will be the job that will be slow to recover.

Depending on the estimate for the participation rate and job growth (next question), my guess is the unemployment rate will decline into the mid 5% range by December 2021 from the current 6.7%.   Hopefully I'm too pessimistic.

Here are the Ten Economic Questions for 2021 and a few predictions:

• Question #1 for 2021: How much will the economy grow in 2021?
• Question #2 for 2021: Will all the jobs lost in 2020 return in 2021, or will job growth be sluggish?
• Question #3 for 2021: What will the unemployment rate be in December 2021?
• Question #4 for 2021: Will the overall participation rate increase to pre-pandemic levels (63.4% in February 2020) , or will it will only partially recover in 2021?
• Question #5 for 2021: Will the core inflation rate increase in 2021? Will too much inflation be a concern in 2021?
• Question #6 for 2021: Will the Fed raise rates in 2021? What about the asset purchase program?
• Question #7 for 2021: How much will RI increase in 2021? How about housing starts and new home sales in 2021?
• Question #8 for 2021: What will happen with house prices in 2021?
• Question #9 for 2021: Will inventory increase as the pandemic subsides, or will inventory decrease further in 2021?
• Question #10 for 2021: How much damage did the pandemic do to certain sectors?

by Calculated Risk on 1/01/2021 09:06:00 AM

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

This data is as of December 29th.

From Black Knight: The U.S. Sees its Third Consecutive Week of Forbearance Plans Increases

In the past week, our McDash Flash Forbearance Tracker found that forbearance plan volumes ticked upwards for the third week in a row, rising by 15,000 from the prior week and pushing the number of active plans to its highest level since early November.

We saw FHA/VA forbearances increase by 11,000 this week, with portfolio/PLS forbearances increasing by 4,000 while GSE volumes remained flat.
...
Click on graph for larger image.

This week’s increase was primarily the result of limited forbearance plan removal activity, with removals falling to their lowest level since the start of the pandemic, likely due (at least in part) to the holiday week.

On a bright note, forbearance plan starts also hit their lowest level since the pandemic began, a number also likely impacted by the holidays. Forbearance start volumes have now fallen in each of the last three weeks running.

Despite three consecutive weekly rises, the number of active plans only stands 13,000 higher than the same point last month, and with nearly 270,000 forbearance plans still set to expire at the end of December, it’s possible that we could see an inflow of forbearance plan removals over the first week of January, a situation Black Knight experts will continue to monitor.

As of Dec. 29, some 2.83 million (5.3% of) homeowners remain in COVID-19-related forbearance plans, including 3.5% (964,000) of GSE mortgages, 9.6% (1.16 million) of FHA/VA loans and 5.4% (700,000) of portfolio-held and privately securitized loans.
emphasis added