by Calculated Risk on 6/13/2021 08:47:00 AM

Expectations are there will be no change to rate policy when the FOMC meets on Tuesday and Wednesday this week, but that the FOMC will talk about the path of asset purchases.

Here are some comments from Merrill Lynch economists:

"Based on the FOMC minutes and subsequent speeches, we think Fed Chair Powell will note that Fed officials talked about the path of asset purchases, but that they are still very comfortable with the current program. He will reiterate that it is “some time” before substantial further progress in the economy has been made to justify a change in asset purchases. And finally he will note that starting to discuss the path for asset purchases is consistent with the idea that the Fed wants to give an abundance of guidance about changes to the policy ...

We expect the SEP forecasts to reveal a significant upward revision to core and headline PCE this year given the recent data; we are forecasting 3.1% and 3.5%, respectively, for this year (4Q/4Q change). The more important signal will be if the Fed also revises up core inflation for 2022 and 2023, which would suggest that they believe some of the gain in inflation will prove to be a bit more persistent — we think the risk is that 2022 increases to 2.1%. We also expect upward revisions to GDP this year but unlikely changes in the out years. We don’t expect significant changes to the unemployment rate."
emphasis added

For review, below are the March FOMC projections.

GDP projections of Federal Reserve Governors and Reserve Bank presidents, Change in Real GDP1
Projection Date	2021	2022	2023
Mar 2021	5.8 to 6.6	3.0 to 3.8	2.0 to 2.5
Dec 2020	3.7 to 5.0	3.0 to 3.5	2.2 to 2.7

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.

Note that real GDP increased 6.4% annualized in Q1.   And forecasts are for GDP to increase close to 10% in Q2.

It seems likely there will be a further upgrade to the GDP forecast for 2021.   

The unemployment rate was at 5.8% in May.

As people reenter the labor force - pushing up the participation rate - the improvement in the unemployment rate will likely slow.  So it seems like there will be little change to the March unemployment projections.

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents, Unemployment Rate2
Projection Date	2021	2022	2023
Mar 2021	4.2 to 4.7	3.6 to 4.0	3.2 to 3.8
Dec 2020	4.7 to 5.4	3.8 to 4.6	3.5 to 4.3

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

As of April 2021, PCE inflation was up 3.6% from April 2020. There was some base effect (since PCE inflation declined last year in the early months of the pandemic), but there was a clear pickup in inflation.

The FOMC will revise up their inflation projections. Merrill economists expect PCE inflation projections to be increased to around 3.1% for 2021.

Inflation projections of Federal Reserve Governors and Reserve Bank presidents, PCE Inflation1
Projection Date	2021	2022	2023
Mar 2021	2.2 to 2.4	1.8 to 2.1	2.0 to 2.2
Dec 2020	1.7 to 1.9	1.8 to 2.0	1.9 to 2.1

PCE core inflation was up 3.1% in April year-over-year and the projections for 2021 will be revised up.

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents, Core Inflation1
Projection Date	2021	2022	2023
Mar 2021	2.0 to 2.3	1.9 to 2.1	2.0 to 2.2
Dec 2020	1.7 to 1.8	1.8 to 2.0	1.9 to 2.1

It will be interesting to see if the FOMC projects an overshoot in inflation in 2022 or 2023.

by Calculated Risk on 6/12/2021 07:03:00 PM

As expected the is a correlation between states with high vaccination rates, and low COVID cases.  The top four vaccination states are Vermont, Hawaii, Massachusetts and Connecticut, with an average of 80.6% vaccinated (percent 18+ at least one dose) and 2.4 new cases per day per 100,000.

The bottom four vaccination states are Mississippi, Alabama, Louisiana and Wyoming, with an average of 46.2% vaccinated, and 6.3 new cases per day per 100,000.

Vaccines are free, safe and effective!

This data is from the CDC.

According to the CDC, on Vaccinations.

Total doses administered: 308,112,728, as of yesterday 306,509,795. Daily: 1.60 million.

COVID Metrics
	Current	Yesterday	Goal
Percent over 18, One Dose	64.3%	64.1%	≥70.0%1,2
Fully Vaccinated (millions)	143.1	142.1	≥1601
New Cases per Day3	13,295	14,138	≤5,0002
Hospitalized3	15,304	15,717	≤3,0002
Deaths per Day3	348	358	≤502
1 America's Goal by July 4th, 2my goals to stop daily posts, 37 day average for Cases, Hospitalized, and Deaths

KUDOS to the residents of the 13 states that have already achieved the 70% goal: Vermont, Hawaii and Massachusetts are at 80%+, and Connecticut, New Jersey, Maine, Rhode Island, Pennsylvania, New Mexico, California, New Hampshire, Maryland, and Washington are all over 70%.

Next up are New York at 69.7%, D.C. at 69.6%, Illinois at 69.1%, Virginia at 68.9%, Minnesota at 68.4%, Delaware at 68.0%, Colorado at 67.7% and Oregon at 67.6%.

Click on graph for larger image.

This graph shows the daily (columns) and 7 day average (line) of positive tests reported.

This data is from the CDC.

by Calculated Risk on 6/12/2021 04:54:00 PM

Note: Remember sales were weak in April and May 2020 due to the pandemic.  I'm tracking data for many local markets around the U.S. I think it is especially important to watch inventory this year.

For Boston (single family and condos):

Closed sales in May 2021 were 2,533, up 67.9% from 1,509 in May 2020.

Active Listings in May 2021 were 3,418, down 19.6% from 4,250 in May 2020.  

Inventory in May was up 9.8% from last month.

by Calculated Risk on 6/12/2021 08:11:00 AM

The key reports this week are May Retail sales and Housing Starts.

For manufacturing, the Industrial Production report, and the NY and Philly Fed manufacturing surveys, will be released this week.

The FOMC meets on Tuesday and Wednesday, and no change to policy is expected at this meeting.

----- Monday, June 14th -----
No major economic releases scheduled.

----- Tuesday, June 15th -----
8:30 AM: The Producer Price Index for May from the BLS. The consensus is for a 0.6% increase in PPI, and a 0.6% increase in core PPI.

8:30 AM: The New York Fed Empire State manufacturing survey for June. The consensus is for a reading of 22.0, down from 24.3.

8:30 AM: Retail sales for May is scheduled to be released.  The consensus is for 0.4% decrease in retail sales.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline). Retail sales ex-gasoline were up 0.1% in April.

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

This graph shows industrial production since 1967.

The consensus is for a 0.6% increase in Industrial Production, and for Capacity Utilization to increase to 75.1%.

10:00 AM: The June NAHB homebuilder survey. The consensus is for a reading of 83, unchanged from 83 last month. Any number below 50 indicates that more builders view sales conditions as poor than good.

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

8:30 AM ET: Housing Starts for May.

This graph shows single and total housing starts since 1968.

The consensus is for 1.630 million SAAR, up from 1.569 million SAAR in April.

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

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.

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

----- Thursday, June 17th -----
8:30 AM: The initial weekly unemployment claims report will be released.  The consensus is for a decrease to 365 thousand from 376 thousand last week.

8:30 AM: the Philly Fed manufacturing survey for June. The consensus is for a reading of 31.0, down from 31.5.

----- Friday, June 18th -----
No major economic releases scheduled.

by Calculated Risk on 6/11/2021 08:52:00 PM

Note: Remember sales were weak in April and May 2020 due to the pandemic, so the YoY comparison is easy. I'm tracking data for many local markets around the U.S. I think it is especially important to watch inventory this year.

From the South Carolina Realtors for the entire state:

Closed sales in May 2021 were 9,705, up 35.9% from 7,142 in May 2020.

Active Listings in May 2021 were 11,278, down 54.7% from 24,878 in May 2020.

Inventory in May was essentially unchanged from the record low last month.

Months of Supply was 1.2 Months in May 2021, compared to 3.1 Months in May 2020.

by Calculated Risk on 6/11/2021 05:29:00 PM

The unvaccinated are still dying at a rate of over 10,000 a month in the US, and many more unvaccinated are suffering with LongCovid symptoms.  And there is a free, safe and effective alternative!

This data is from the CDC.

According to the CDC, on Vaccinations.

Total doses administered: 306,509,795, as of yesterday 305,687,618. Daily: 0.82 million.

COVID Metrics
	Current	Yesterday	Goal
Percent over 18, One Dose	64.1%	64.0%	≥70.0%1,2
Fully Vaccinated (millions)	142.1	141.6	≥1601
New Cases per Day3	13,809	14,013	≤5,0002
Hospitalized3	15,717	16,142	≤3,0002
Deaths per Day3	352	347	≤502
1 America's Goal by July 4th, 2my goals to stop daily posts, 37 day average for Cases, Hospitalized, and Deaths

KUDOS to the residents of the 13 states that have already achieved the 70% goal: Vermont, Hawaii and Massachusetts are at 80%+, and Connecticut, New Jersey, Maine, Rhode Island, Pennsylvania, New Mexico, California, New Hampshire, Maryland, and Washington are all over 70%.

Next up are New York at 69.5%, D.C. at 69.4%, Illinois at 68.9%, Virginia at 68.7%, Minnesota at 68.3%, Delaware at 67.8%, Colorado at 67.6% and Oregon at 67.4%.

Click on graph for larger image.

This graph shows the daily (columns) and 7 day average (line) of positive tests reported.

This data is from the CDC.

by Calculated Risk on 6/11/2021 02:07:00 PM

Note: I'm tracking data for many local markets around the U.S. I think it is especially important to watch inventory this year.

From the Minnesota Realtors®:

Total Residential Units Sold in May 2021 were 7,982, up 14.5% from 6,971 in May 2020.

Active Residential Listings in May 2021 were 8,953, down 50.5% from 18,074 in May 2020.

Months of Supply was 1.1 Months in May 2021, compared to 2.6 Months in May 2020.

Click on graph for larger image.

This graph from the Minnesota Realtors® shows inventory in Minnesota since 2012. Inventory had been trending down, and then was somewhat flat for a few years, and then declined significantly during the pandemic.

by Calculated Risk on 6/11/2021 01:32:00 PM

Note: Remember sales were weak in April and May 2020 due to the pandemic, so the YoY comparison is easy. I'm tracking data for many local markets around the U.S. I think it is especially important to watch inventory this year.

From the Colorado Association of REALTORS® for the entire state:

Closed sales for Single Family and Townhouse-Condo in May 2021 were 11,128, up 58.3% from 7,029 in May 2020.

Active Listings for Single Family and Townhouse-Condo in May 2021 were 7,034, down 69.4% from 23,060 in May 2020.

Inventory in May was down 10.6% from last month.

Months of Supply was 0.6 Months in May 2021, compared to 2.5 Months in May 2020.

by Calculated Risk on 6/11/2021 11:29:00 AM

Note: Remember sales were weak in April and May 2020 due to the pandemic. I'm tracking data for many local markets around the U.S. I think it is especially important to watch inventory this year.

For the Charlotte Region:

Closed sales in May 2021 were 4,784, up 26.4% from 3,785 in May 2020.

Active Listings in May 2021 were 3,104, down 62.0% from 8,177 in May 2020.

Inventory in May was up 2.8% from last month.

Months of Supply was 0.6 Months in May 2021, compared to 1.9 Months in May 2020.

by Calculated Risk on 6/11/2021 11:22:00 AM

From Merrill Lynch:

2Q GDP tracking has fallen to 9.5% qoq saar from 11% as we incorporate our forecast for retail sales. 1Q GDP is also tracking slightly lower at 6.2% following trade data this week. [June 11 estimate]
emphasis added

From Goldman Sachs:

We left our Q2 GDP tracking estimate unchanged at +9.5% (qoq ar). [June 9 estimate]

From the NY Fed Nowcasting Report

The New York Fed Staff Nowcast stands at 4.2% for 2021:Q2 and 5.3% for 2021:Q3. [June 11 estimate]

And from the Altanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2021 is 9.3 percent on June 9, down from 9.4 percent on June 8. [June 9 estimate]