by Calculated Risk on 9/09/2021 04:59:00 PM

I'm tracking new cases, hospitalizations and deaths due to COVID, mostly to assess the impact on the economy.

Just over a month ago, many Americans, and economic analysts, assumed COVID was mostly behind us. Unfortunately they were wrong, and COVID has impacted the economic outlook once again.

For example, on July 30th, Goldman Sachs wrote: "we are launching our Q3 GDP tracking estimate at +9.0% (qoq ar)"

Then in mid-August, they downgraded their forecast: "We have lowered our Q3 GDP forecast to +5.5%, reflecting hits to both consumer spending and production."

And this week, on September 6th, they downgraded their forecast again: “We now expect GDP growth of 3.5% in Q3." That is about one third of the real growth they expected just 5 weeks ago!

Other analysts have made similar downgrades for Q3. There are several reasons for the change: the surge in COVID cases has impacted some consumer spending, supply chain disruptions are ongoing (and COVID is impacting the supply chain recovery), and possibly some downgrades due to policy (expiration of unemployment benefits during a COVID wave).

Right now it is looking like new cases are peaking, but far above the 12,000 per day level we saw in June.   And it looks like we might see another Winter wave for several reasons:

1) There is a huge reservoir of virus (about 150,000 new cases have been reported per day).

2) Schools are reopening, and kids spread the virus easily.

3) Many Americans have moved past taking even the easiest mitigation efforts (like wearing masks indoors).

4) Only 53.4% of Americans are vaccinated, and the percent is increasing very slowly.

5) Thanksgiving is only 77 days from now (followed by Christmas and New Years).  Families will want to gather in person this year.  

A severe winter COVID wave could be a significant economic drag in Q4, and Q1 2022.  And the most vulnerable are losing their extended unemployment benefits, and could be facing eviction.  Hopefully there won't be another wave.  Best to all

by Calculated Risk on 9/09/2021 03:34:00 PM

The CDC is the source for all data.

According to the CDC, on Vaccinations.  Total doses administered: 377,622,065, as of a week ago 372,116,617. Average doses last week: 0.79 million per day. 

COVID Metrics
	Today	Week Ago	Goal
Percent fully Vaccinated	53.4%	52.7%	≥70.0%1
Fully Vaccinated (millions)	177.4	175.0	≥2321
New Cases per Day3	136,558	156,340	≤5,0002
Hospitalized3	92,646	92,696	≤3,0002
Deaths per Day3	1,076	1,214	≤502
1 Minimum to achieve "herd immunity" (estimated between 70% and 85%). 2my goals to stop daily posts, 37 day average for Cases, Currently Hospitalized, and Deaths 🚩 Increasing 7 day average week-over-week for Cases, Hospitalized, and Deaths ✅ Goal met.

IMPORTANT: For "herd immunity" most experts believe we need 70% to 85% of the total population fully vaccinated (or already had COVID).  

KUDOS to the residents of the 11 states that have achieved 60% of total population fully vaccinated: Vermont at 68.4%, Massachusetts, Maine, Connecticut, Rhode Island, Maryland. New Jersey, Washington, New York, New Mexico, New Hampshire at 60.4%.

The following 13 states and D.C. have between 50% and 59.9% fully vaccinated: Oregon at 58.8%, District of Columbia, Virginia, Colorado, Minnesota, California, Hawaii, Delaware, Pennsylvania, Wisconsin, Florida, Nebraska, Iowa, Illinois, and Michigan at 51.0%.

Next up (total population, fully vaccinated according to CDC) are South Dakota at 49.9%, Kentucky at 49.6%, Arizona at 49.4%, Kansas at 49.1%, Ohio at 49.0%, Nevada at 48.7%, Texas at 48.6%, Utah at 48.5% and Alaska at 48.1%.

Click on graph for larger image.

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

by Calculated Risk on 9/09/2021 02:26:00 PM

From Dodge Data Analytics: Dodge Momentum Index Loses Steam in August

The Dodge Momentum Index dropped 3% in August to 148.7 (2000=100) from the revised July reading of 154.0. The Momentum Index, issued by Dodge Data & Analytics, is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year.

The commercial planning component lost 2% in August, while the institutional component fell by 6%.

Projects entering the earliest stages of planning have declined following the torrid pace set in the spring. The decline in August was the third consecutive drop in the Momentum Index, which is now off 14% from the most recent high in May, since May the commercial component is down 10% and the institutional component is 22% lower. This reversal comes as prices for materials used in nonresidential buildings increase in combination with a shortage of labor and a rising number of new COVID-19 cases from the Delta variant, all working in concert to undermine confidence in the fledgling construction recovery. There were some pockets of strength in August, however, as more data center, education and warehouse projects moved into planning relative to the prior month. Additionally, the overall level of the Momentum Index is 19% higher than one year ago; institutional planning was up 17% and commercial planning was 20% higher than last year.
emphasis added

Click on graph for larger image.

This graph shows the Dodge Momentum Index since 2002. The index was at 148.7 in August, down from 154.0 in July.

According to Dodge, this index leads "construction spending for nonresidential buildings by a full year".  This index suggests a decline in Commercial Real Estate construction through most of 2021, but perhaps a pickup towards the end of the year, and growth in 2022 (even with the decline in the August index).

by Calculated Risk on 9/09/2021 11:40:00 AM

Starting this month, I'm going to post local market data (Sales, Active Inventory, New listings) weekly on the CalculatedRisk Newsletter.

Here are the first 6 of about 30 local markets that I track: 6 Local Housing Markets in August

This includes Denver, Las Vegas, San Diego, North Texas (Dallas/Ft. Worth), Northwest (Seattle) and Santa Clara (San Jose).

by Calculated Risk on 9/09/2021 08:35:00 AM

The DOL reported:

In the week ending September 4, the advance figure for seasonally adjusted initial claims was 310,000, a decrease of 35,000 from the previous week's revised level. This is the lowest level for initial claims since March 14, 2020 when it was 256,000. The previous week's level was revised up by 5,000 from 340,000 to 345,000. The 4-week moving average was 339,500, a decrease of 16,750 from the previous week's revised average. This is the lowest level for this average since March 14, 2020 when it was 225,500. The previous week's average was revised up by 1,250 from 355,000 to 356,250.
emphasis added

This does not include the 96,198 initial claims for Pandemic Unemployment Assistance (PUA) that was down from 102,521 the previous week.

The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 339,500.

The previous week was revised up.

Regular state continued claims decreased to 2,662,831 (SA) from 2,796,781 (SA) the previous week.

Note: There are an additional 5,090,524 receiving Pandemic Unemployment Assistance (PUA) that decreased from 5,413,238 the previous week (there are questions about these numbers). This is a special program for business owners, self-employed, independent contractors or gig workers not receiving other unemployment insurance.  And an additional 3,807,646 receiving Pandemic Emergency Unemployment Compensation (PEUC) up from 3,800,000.

Weekly claims were lower than the consensus forecast.

by Calculated Risk on 9/08/2021 08:09:00 PM

The Las Vegas Realtors reported Southern Nevada home prices pause at record level; LVR housing statistics for August 2021

A report released Wednesday by Las Vegas REALTORS® (LVR) shows local home prices holding steady as families were preoccupied getting their kids in school, graduates off to college and all the seasonal reasons that cause what LVR leaders called a momentary pause while the market readies for its last surge before the expected holiday slowdown begins.

Meanwhile, the local housing supply continues to grow slowly, making August the seventh straight month when there were more properties available without offers than in the previous month.
...
LVR reported a total of 4,098 existing local homes, condos and townhomes sold during August. Compared to one year ago, August sales were up 10.3% for homes and up 29.8% for condos and townhomes. So far this year, local home sales are on pace to exceed last year’s total.
…
By the end of August, LVR reported 3,256 single-family homes listed for sale without any sort of offer. While up from the previous month, that’s down 29.8% from the same time last year. The 687 condos and townhomes listed without offers in August was down 55.5% from one year ago.
...
With eviction and foreclosure bans still in place, the number of so-called distressed sales remains near historically low levels. LVR reported that short sales and foreclosures combined accounted for just 0.3% of all existing local property sales in August. That compares to 1.2% of all sales one year ago, 2.1% of all sales two years ago, 2.5% three years ago and 6.1% four years ago.
emphasis added

1) Overall sales (single family and condos) were up 14.0% year-over-year from 3,594 in August 2020 to 4,098 in August 2021.

2) Active inventory (single-family and condos) is down 36.2% from a year ago, from a total of 6,183 in August 2020 to 3,943 in August 2021.  And months of inventory is extremely low.

3) Active inventory is up 7.5% from the previous month (July 2021), and up 68% from the all time low in February 2021 (2,352 single family and condos active listings).

by Calculated Risk on 9/08/2021 03:56:00 PM

Some twitter comments in the newsletter from Rick Palacios Jr., Director of Research at John Burns Real Estate Consulting (a must follow for housing on twitter!):

Homebuilder Comments in August: “Supply shortages are getting worse."

by Calculated Risk on 9/08/2021 03:40:00 PM

The CDC is the source for all data.

According to the CDC, on Vaccinations.  Total doses administered: 376,955,132, as of a week ago 371,280,129. Average doses last week: 0.81 million per day. 

COVID Metrics
	Today	Week Ago	Goal
Percent fully Vaccinated	53.3%	52.6%	≥70.0%1
Fully Vaccinated (millions)	177.1	174.6	≥2321
New Cases per Day3	140,058	155,826	≤5,0002
Hospitalized3🚩	92,545	92,401	≤3,0002
Deaths per Day3	1,022	1,129	≤502
1 Minimum to achieve "herd immunity" (estimated between 70% and 85%). 2my goals to stop daily posts, 37 day average for Cases, Currently Hospitalized, and Deaths 🚩 Increasing 7 day average week-over-week for Cases, Hospitalized, and Deaths ✅ Goal met.

IMPORTANT: For "herd immunity" most experts believe we need 70% to 85% of the total population fully vaccinated (or already had COVID).  

KUDOS to the residents of the 11 states that have achieved 60% of total population fully vaccinated: Vermont at 68.3%, Massachusetts, Maine, Connecticut, Rhode Island, Maryland. New Jersey, Washington, New York, New Mexico, New Hampshire at 60.3%.

The following 13 states and D.C. have between 50% and 59.9% fully vaccinated: Oregon at 58.7%, District of Columbia, Virginia, Colorado, Minnesota, California, Hawaii, Delaware, Pennsylvania, Wisconsin, Florida, Nebraska, Iowa, Illinois, and Michigan at 50.9%.

Next up (total population, fully vaccinated according to CDC) are South Dakota at 49.8%, Kentucky at 49.5%, Arizona at 49.3%, Kansas at 49.1%, Ohio at 48.9%, Nevada at 48.7%, Texas at 48.5%, Utah at 48.3% and Alaska at 48.0%.

Click on graph for larger image.

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

by Calculated Risk on 9/08/2021 02:06:00 PM

Fed's Beige Book "This report was prepared at the Federal Reserve Bank of New York based on information collected on or before August 30, 2021."

Economic growth downshifted slightly to a moderate pace in early July through August. The stronger sectors of the economy of late included manufacturing, transportation, nonfinancial services, and residential real estate. The deceleration in economic activity was largely attributable to a pullback in dining out, travel, and tourism in most Districts, reflecting safety concerns due to the rise of the Delta variant, and, in a few cases, international travel restrictions. The other sectors of the economy where growth slowed or activity declined were those constrained by supply disruptions and labor shortages, as opposed to softening demand. In particular, weakness in auto sales was widely ascribed to low inventories amidst the ongoing microchip shortage, and restrained home sales activity was attributed to low supply. Growth in non-auto retail sales slowed a bit in some Districts, rising at a modest pace, on balance, across the nation. Residential construction was up slightly, on balance, and nonresidential construction picked up modestly. Trends in loan volumes varied widely across Districts, ranging from down modestly to up strongly. Reports on the agriculture and energy sectors were mixed across Districts but, on balance, positive. Looking ahead, businesses in most Districts remained optimistic about near-term prospects, though there continued to be widespread concern about ongoing supply disruptions and resource shortages.
...
All Districts continued to report rising employment overall, though the characterization of the pace of job creation ranged from slight to strong. Demand for workers continued to strengthen, but all Districts noted extensive labor shortages that were constraining employment and, in many cases, impeding business activity. Contributing to these shortages were increased turnover, early retirements (especially in health care), childcare needs, challenges in negotiating job offers, and enhanced unemployment benefits. Some Districts noted that return-to-work schedules were pushed back due to the increase in the Delta variant. With persistent and extensive labor shortages, a number of Districts reported an acceleration in wages, and most characterized wage growth as strong—including all of the midwestern and western regions. Several Districts noted particularly brisk wage gains among lower-wage workers. Employers were reported to be using more frequent raises, bonuses, training, and flexible work arrangements to attract and retain workers.
emphasis added

by Calculated Risk on 9/08/2021 11:12:00 AM

Black Knight released their Mortgage Monitor report for July today. According to Black Knight, 4.14% of mortgage were delinquent in July, down from 4.37% of mortgages in June, and down from 6.91% in July 2020. Black Knight also reported that 0.26% of mortgages were in the foreclosure process, down from 0.36% a year ago.

This gives a total of 4.40% delinquent or in foreclosure.

Press Release: Black Knight: Tappable Equity Rises $1 Trillion in Q2 2021 Alone to Hit All-Time High of $9.1 Trillion; Quarter Also Sees Largest Volume of Cash-Out Refis in 15 Years

Today, the Data & Analytics division of Black Knight, Inc. released its latest Mortgage Monitor Report, based upon the company’s industry-leading mortgage, real estate and public records datasets. With full Q2 data in and analyzed, this month’s report looks at incredible growth in the nation’s levels of tappable equity – the amount available for homeowners with mortgages to borrow against while still retaining at least 20% equity in their homes. According to Black Knight Data & Analytics President Ben Graboske, continued heat in the housing market drove tappable equity levels to never-before-seen heights in the second quarter of 2021.

“Tappable equity grew an astonishing 37% year-over-year in Q2 2021, driven by increasing gains in home values over the quarter,” said Graboske. “According to our Black Knight HPI, as of the end of June, home values had risen nearly 20% from the year before and 7.4% in Q2 alone. As a result, already at a record high of $8.1 trillion at the end of Q1, U.S. homeowners with mortgages gained another $1 trillion in tappable equity in the second quarter alone. This is by far the strongest growth we’ve ever seen and equates to some $173,000 in equity available to the average mortgage holder, a $20,000 increase in just three months.

“A rising tide lifts all boats as they say, including homeowners in forbearance – whose ability to return to making payments when forbearance ends will likely be a key driver in the nation’s overall COVID-19 economic recovery. Some 98% of homeowners in forbearance now have at least 10% equity in their homes. Even when we add in 18 months of forborne payments – including principal, interest, taxes and insurance – the share with less than 10% equity only climbs to 7%, about 135,000 homeowners. This is a drastically different dynamic than during the worst of the Great Recession, when more than 40% of all mortgage holders had less than 10% equity and 28% were fully underwater. Such strong equity positions should help limit the volume of distressed inflow into the real estate market as well as provide strong incentive for homeowners to return to making mortgage payments – even if needing to be reduced through modification.”
emphasis added

Click on graph for larger image.

Here is a graph on delinquencies from Black Knight:

• The national delinquency rate saw a 5% reduction in July, and at 4.14% is within a single percentage point of its pre-pandemic level

• While overall delinquency volumes continue to edge closer to pre-pandemic levels, some 1.45 million borrowers remained 90 or more days past due – but not yet in foreclosure – at the end of July

And on tappable equity from Black Knight:

• Despite rising equity withdrawals, the housing market continues to drive skyrocketing borrower equity positions

• Tappable equity – the amount available for homeowners with mortgages to borrow against while still retaining at least 20% equity in their homes – was already at a record high of $8.1T at the end of Q1

• According to our Black Knight HPI, as of the end of June, home values had risen nearly 20% from the year before and 7.4% in Q2 alone

• As a result, U.S. homeowners with mortgages gained another $1T in tappable equity in Q2 alone to make an astonishing 37% year-over-year gain
...
• The 1.1M cash-outs originated in Q2 were the largest quarterly volume in nearly 15 years, with more than $63B in equity withdrawn in the quarter – the most since mid-2007

There is much more in the mortgage monitor.