by Calculated Risk on 11/04/2021 04:08:00 PM

A few brief excerpts from a note by Goldman Sachs economist Spencer Hill:

We estimate nonfarm payrolls rose 525k in October ... tomorrow’s report reflects the first full month of hiring following the expiration of federal enhanced unemployment benefits. Our forecast also reflects improving public health, strong labor demand, and a partial education rebound as schools gradually fill positions left open at the start of the school year. On the negative side, the seasonal factors may have evolved to fit the strong October 2020 data, raising the seasonal hurdle in tomorrow’s report. ... We estimate a one-tenth drop in the unemployment rate to 4.7%.
emphasis added

CR Note: The consensus is for 450 thousand jobs added, and for the unemployment rate to decrease to 4.7%.

by Calculated Risk on 11/04/2021 03:30:00 PM

The CDC is the source for all data.

According to the CDC, on Vaccinations.  Total doses administered: 425,272,828, as of a week ago 417,795,537, or 1.07 million doses per day.

COVID Metrics
	Today	Week Ago	Goal
Percent fully Vaccinated	58.1%	57.6%	≥70.0%1
Fully Vaccinated (millions)	192.9	191.2	≥2321
New Cases per Day3	70,431	71,450	≤5,0002
Hospitalized3	41,850	45,892	≤3,0002
Deaths per Day3	1,109	1,216	≤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).  Note: COVID will probably stay endemic (at least for some time).

KUDOS to the residents of the 4 states that have achieved 70% of total population fully vaccinated: Vermont at 71.4%, Rhode Island, Connecticut, and Maine at 70.8% .

KUDOS also to the residents of the 15 states and D.C. that have achieved 60% of total population fully vaccinated: Massachusetts at 69.8%, New York, New Jersey, Maryland, New Mexico, New Hampshire, Washington, Oregon, Virginia, District of Columbia,  Colorado, California, Pennsylvania,  Illinois, Delaware, and Minnesota at 60.0%.

The following 20 states have between 50% and 59.9% fully vaccinated: Hawaii at 59.9%, Florida, Wisconsin, Nebraska, Iowa, Illinois, Michigan, Kentucky, South Dakota, Texas, Arizona, Kansas, Nevada, Alaska, Utah, North Carolina, Ohio, Montana, Oklahoma, and South Carolina at 50.1%.

Next up (total population, fully vaccinated according to CDC) are Indiana at 49.9%, Missouri at 49.9%, Georgia at 48.4%, and Arkansas 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 11/04/2021 01:37:00 PM

On Friday at 8:30 AM ET, the BLS will release the employment report for October. The consensus is for 450 thousand jobs added, and for the unemployment rate to decrease to 4.7%.

There were 194 thousand jobs added in September, and the unemployment rate was at 4.8%.

Click on graph for larger image.

• First, currently there are still about 5.0 million fewer jobs than in February 2020 (before the pandemic).

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, but is now better than the worst of the "Great Recession".

• ADP Report: The ADP employment report showed a gain of 571,000 private sector jobs, above the consensus estimate of 400,000 jobs added.  The ADP report hasn't been very useful in predicting the BLS report, but this suggests the BLS report could be above expectations.

• ISM Surveys: Note that the ISM services are diffusion indexes based on the number of firms hiring (not the number of hires).  The ISM® manufacturing employment index increased in October to 52.0%, up from 50.2% last month.   This would suggest a decline in manufacturing employment of around 8,000 jobs in October. ADP showed 53,000 manufacturing jobs added.

The ISM® Services employment index decreased in October to 51.6%, down from 53.0% last month.   This would suggest an increase in service employment of around 115,000 jobs in September.

Combined, the ISM indexes suggest a weaker than expected employment report.

• Unemployment Claims: The weekly claims report showed a sharp decline in the number of initial unemployment claims during the reference week (includes the 12th of the month) from 351,000 in September to 291,000 in October. This would usually suggest fewer layoffs in October than in September, although this might not be very useful right now. In general, weekly claims have been falling, and have been below expectations in October.

• Permanent Job Losers: Something to watch in the employment report will be "Permanent job losers". This graph shows permanent job losers as a percent of the pre-recession peak in employment through the June report.

This data is only available back to 1994, so there is only data for three recessions. In September, the number of permanent job losers decreased to 2.251 million from 2.487 million in August. These jobs will likely be the hardest to recover, so it is a positive that the number of permanent job losers is declining rapidly

• Seasonal Retail Hiring: Typically retail companies start hiring for the holiday season in October, and really increase hiring in November.   But only a few temporary workers are hired in December.  Here is a graph that shows the historical net retail jobs added for October, November and December by year.

In 2020, retailers hired 239,200 employees (NSA) in October (most seasonal, but some bounce back during pandemic). That translated to a gain of 106,000 jobs SA.

If seasonal retail hiring is around 140,000 this year (NSA) that will translate to around zero jobs added (SA).

• Conclusion: There is significant optimism concerning the October employment report, and many analysts are expecting a strong report.  We have to be a little cautious because some of the apparent pickup in hiring might be for seasonal retail jobs.

Overall, the ADP report was solid and unemployment claims have been falling quickly.  The ISM reports were less positive.

As far as the pandemic, the number of daily cases during the reference week in October was around 90,000, down from around 142,000 in September.   New cases per day peaked in early September, so by the October reference week there was significant optimism due to cases declining.

My sense is the report will be above consensus expectations.

by Calculated Risk on 11/04/2021 11:20:00 AM

Note: Since occupancy declined sharply at the onset of the pandemic, CoStar is comparing to 2019.

From CoStar: STR: Tampa Leads Top 25 US Markets in Weekly Performance

As anticipated ahead of Halloween, U.S. hotel performance fell week over week, according to STR‘s latest data through 30 October.

Oct. 24-30, 2021 (percentage change from comparable week in 2019*):

• Occupancy: 58.9% (-5.7%)
• Average daily rate (ADR): US$127.70 (+1.5%)
• evenue per available room (RevPAR): US$75.28 (-4.3%)

Even with a drop in performance levels from previous weeks, comparisons with the matching week in 2019 improved because Halloween that year fell on a Thursday and created a more significant disruption in business travel and groups.

*Due to the steep, pandemic-driven performance declines of 2020, STR is measuring recovery against comparable time periods from 2019.
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 2021, black is 2020, blue is the median, dashed purple is 2019, and dashed light blue is for 2009 (the worst year on record for hotels prior to 2020).

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

The occupancy rate will now decline seasonally into the new year.

by Calculated Risk on 11/04/2021 08:48:00 AM

From the Department of Commerce reported:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $80.9 billion in September, up $8.1 billion from $72.8 billion in August, revised.

September exports were $207.6 billion, $6.4 billion less than August exports. September imports were $288.5 billion, $1.7 billion more than August imports.
emphasis added

Click on graph for larger image.

Exports decreased and imports increased in September.

Exports are up 17% compared to September 2020; imports are up 20% compared to September 2020.

Both imports and exports decreased sharply due to COVID-19, and have now bounced back (imports  more than exports),

The second graph shows the U.S. trade deficit, with and without petroleum.

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.

Note that net, imports and exports of petroleum products are close to zero.

The trade deficit with China increased to $36.5 billion in September, from $29.7 billion in September 2020.

by Calculated Risk on 11/04/2021 08:33:00 AM

The DOL reported:

In the week ending October 30, the advance figure for seasonally adjusted initial claims was 269,000, a decrease of 14,000 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 2,000 from 281,000 to 283,000. The 4-week moving average was 284,750, a decrease of 15,000 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 500 from 299,250 to 299,750.
emphasis added

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 284,750.

The previous week was revised up.

Regular state continued claims decreased to 2,105,000 (SA) from 2,239,000 (SA) the previous week.

Weekly claims were below consensus forecast.

by Calculated Risk on 11/03/2021 09:00:00 PM

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released.  The consensus is for 275 thousand initial claims, down from 281 thousand last week.

• Also a 8:30 AM, Trade Balance report for September from the Census Bureau.  The consensus is for the deficit to be $74.1 billion in September, from $73.3 billion in August.

by Calculated Risk on 11/03/2021 05:34:00 PM

The BEA released their estimate of light vehicle sales for October today. The BEA estimates sales of 12.99 million SAAR in October 2021 (Seasonally Adjusted Annual Rate), up 6.3% from the September sales rate, and down 20.8% from October 2020. 

This was well above the consensus estimate of 12.4 million SAAR.

Click on graph for larger image.

This graph shows light vehicle sales since 1967 from the BEA. The dashed line is sales for the current month.

The impact of COVID-19 was significant, and April 2020 was the worst month.

After April 2020, sales increased, and were close to sales in 2019 (the year before the pandemic).  

However, sales decreased earlier this year due to supply issues. It appears the "supply chain bottom" was in September.

So far - through October - sales are up 9.2% in 2021 compared to 2020.

This second graph shows the percent of light vehicle sales between passenger cars and trucks / SUVs through October 2021.

Over time the mix has changed more and more towards light trucks and SUVs.

Only when oil prices are high, does the trend slow or reverse.

The percent of light trucks and SUVs was at 80.1% in October 2021 - an all time high.

The third graph shows heavy truck sales since 1967 using data from the BEA. The dashed line is the October 2021 seasonally adjusted annual sales rate (SAAR).

Heavy truck sales really collapsed during the great recession, falling to a low of 180 thousand SAAR in May 2009.  Then heavy truck sales increased to a new all time high of 563 thousand SAAR in September 2019.

Note: "Heavy trucks - trucks more than 14,000 pounds gross vehicle weight."

Heavy truck sales really declined at the beginning of the pandemic, falling to a low of 299 thousand SAAR in May 2020.  

Heavy truck sales were at 445 thousand SAAR in October, up from 404 thousand SAAR in September, but down 1% from 450 thousand SAAR in October 2020.

by Calculated Risk on 11/03/2021 05:32:00 PM

The CDC is the source for all data.

According to the CDC, on Vaccinations.  Total doses administered: 423,942,794, as of a week ago 416,154,424, or 1.11 million doses per day.

COVID Metrics
	Today	Week Ago	Goal
Percent fully Vaccinated	58.1%	57.5%	≥70.0%1
Fully Vaccinated (millions)	192.7	191.0	≥2321
New Cases per Day3🚩	71,029	70,265	≤5,0002
Hospitalized3	42,358	46,452	≤3,0002
Deaths per Day3	1,130	1,213	≤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).  Note: COVID will probably stay endemic (at least for some time).

KUDOS to the residents of the 4 states that have achieved 70% of total population fully vaccinated: Vermont at 71.4%, Rhode Island, Connecticut, and Maine at 70.7% .

KUDOS also to the residents of the 15 states and D.C. that have achieved 60% of total population fully vaccinated: Massachusetts at 69.8%, New York, New Jersey, Maryland, New Mexico, New Hampshire, Washington, Oregon, Virginia, District of Columbia,  Colorado, California, Pennsylvania,  Illinois, Delaware, and Minnesota at 60.0%.

The following 20 states have between 50% and 59.9% fully vaccinated: Hawaii at 59.8%, Florida, Wisconsin, Nebraska, Iowa, Illinois, Michigan, Kentucky, South Dakota, Texas, Arizona, Kansas, Nevada, Alaska, Utah, North Carolina, Ohio, Montana, Oklahoma, and South Carolina at 50.1%.

Next up (total population, fully vaccinated according to CDC) are Indiana at 49.9%, Missouri at 49.8%, Georgia at 48.2%, and Arkansas 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 11/03/2021 02:03:00 PM

Fed Chair Powell press conference video here starting at 2:30 PM ET.

FOMC Statement:

The Federal Reserve is committed to using its full range of tools to support the U.S. economy in this challenging time, thereby promoting its maximum employment and price stability goals.

With progress on vaccinations and strong policy support, indicators of economic activity and employment have continued to strengthen. The sectors most adversely affected by the pandemic have improved in recent months, but the summer's rise in COVID-19 cases has slowed their recovery. Inflation is elevated, largely reflecting factors that are expected to be transitory. Supply and demand imbalances related to the pandemic and the reopening of the economy have contributed to sizable price increases in some sectors. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.

The path of the economy continues to depend on the course of the virus. Progress on vaccinations and an easing of supply constraints are expected to support continued gains in economic activity and employment as well as a reduction in inflation. Risks to the economic outlook remain.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With inflation having run persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer‑term inflation expectations remain well anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved. The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee's assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time. In light of the substantial further progress the economy has made toward the Committee's goals since last December, the Committee decided to begin reducing the monthly pace of its net asset purchases by $10 billion for Treasury securities and $5 billion for agency mortgage-backed securities. Beginning later this month, the Committee will increase its holdings of Treasury securities by at least $70 billion per month and of agency mortgage‑backed securities by at least $35 billion per month. Beginning in December, the Committee will increase its holdings of Treasury securities by at least $60 billion per month and of agency mortgage-backed securities by at least $30 billion per month. The Committee judges that similar reductions in the pace of net asset purchases will likely be appropriate each month, but it is prepared to adjust the pace of purchases if warranted by changes in the economic outlook. The Federal Reserve's ongoing purchases and holdings of securities will continue to foster smooth market functioning and accommodative financial conditions, thereby supporting the flow of credit to households and businesses.

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on public health, labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Thomas I. Barkin; Raphael W. Bostic; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Mary C. Daly; Charles L. Evans; Randal K. Quarles; and Christopher J. Waller.
emphasis added