by Calculated Risk on 11/14/2021 07:01:00 PM

Weekend:
• Schedule for Week of November 14, 2021

Monday:
• At 8:30 AM ET, The New York Fed Empire State manufacturing survey for November. The consensus is for a reading of 20.1, up from 10.5.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are up 10 and DOW futures are up 67 (fair value).

Oil prices were down over the last week with WTI futures at $81.17 per barrel and Brent at $82.45 per barrel. A year ago, WTI was at $40, and Brent was at $42 - so WTI oil prices are up double year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.40 per gallon. A year ago prices were at $2.12 per gallon, so gasoline prices are up $1.28 per gallon year-over-year.

by Calculated Risk on 11/14/2021 02:13:00 PM

On Friday, Goldman Sachs economists put out a research note on the labor force participation rate: Why Isn’t Labor Force Participation Recovering?

Here are few excerpts from the note:

While the unemployment rate continues to fall quickly, labor force participation has made no progress since August 2020. ... Most of the 5.0mn persons who have exited the labor force since the start of the pandemic are over age 55 (3.4mn), largely reflecting early (1.5mn) and natural (1mn) retirements that likely won’t reverse. The outlook for prime-age persons who have exited the labor force (1.7mn) is more positive, since very few are discouraged and most still view their exits as temporary.

First, there are two important monthly surveys from the BLS. The participation rate (and unemployment rate) comes from the Current Population Survey (CPS: commonly called the household survey), a monthly survey of about 60,000 households.

The jobs number comes from Current Employment Statistics (CES: payroll survey), a sample of approximately 634,000 business establishments nationwide.

These are very different surveys: the CPS gives the total number of employed (and unemployed including the alternative measures), and the CES gives the total number of positions (excluding some categories like the self-employed, and a person working two jobs counts as two positions).

Currently the payroll survey shows there are 4.2 million fewer jobs than in February 2020 (pre-pandemic).  

The household survey shows there are 2.99 million fewer people in the labor force than in February 2020.  The 5 million number probably assumes some normal labor force growth, however, overall population growth has been dismal over the last 2 years (little immigration and large number of deaths).  I'm not confident in Goldman's 5 million person estimate.

Here is a graph that shows the employment population ratio and the participation rate through the October 2021 employment report.

Click on graph for larger image.

The Labor Force Participation Rate was unchanged at 61.6% in October, from 61.6% in September. This is the percentage of the working age population in the labor force.

The Employment-Population ratio increased to 58.8% from 58.7% (black line).

Both are far below the pre-pandemic levels, however the overall participation rate was expected to decline due to demographics.

Since the overall participation rate has declined due to the pandemic and demographic  (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.

The 25 to 54 participation rate increased in October to 81.7% from 81.6% in September, and the 25 to 54 employment population ratio increased to 78.3% from 78.0% in September.

Both are still low and indicate that many prime workers have still not returned to the labor force.

In the note, Goldman argues "Most of the 5.0mn persons who have exited the labor force since the start of the pandemic are over age 55 (3.4mn), largely reflecting early (1.5mn) and natural (1mn) retirements that likely won’t reverse." There probably have been a large number of people retiring over the last 2 years, but I think more at least half of the people missing from the labor force are prime age.

Here is a graph of the change in the participation rate by age cohort (October 2019, October 2020, and October 2021 NSA).

If more older people were retiring than expected, we'd see a decline from Blue (pre-pandemic) to Red (pandemic) to Black (October 2021).  We do see this for the "70 to 74" and "75+" age groups.  And this does suggest more retirements than expected in the 70+ age groups.  

However the "55 to 59", "60 to 64" and "65 to 69" age groups are recovering similar to the prime age groups.  

If we calculate the expected labor force by cohort, using the pre-pandemic participation rates, about 50% of the people missing from the labor force are in the prime working age (25 to 54).  About 75% of the people missing are in the 20 to 65 age group.

This suggests to me that there is more slack in the labor market than Goldman estimates.

by Calculated Risk on 11/13/2021 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

• A Zillow Flip that Flopped

• Homebuilder Comments in October: “Builders are lifting sales caps" "Lack of lots & land development will hold back growth in 2022"

• 2nd Look at Local Housing Markets in October Inventory in San Diego is at an all time low

• Inventory will Tell the Tale

• "The deal of the Century ..." Best to all Veterans

• 3rd Look at Local Housing Markets in October Albuquerque, Atlanta, Colorado, Georgia, Houston, Jacksonville, Minnesota, Portland, Sacramento and Santa Clara

This will usually be published several times a week, and will provide more in-depth analysis of the housing market.

The blog will continue as always!

You can subscribe at https://calculatedrisk.substack.com/  Currently all content is available for free - and some will always be free - but please subscribe!.

by Calculated Risk on 11/13/2021 08:11:00 AM

The key economic reports this week are October Retail Sales and Housing Starts.

For manufacturing, October industrial production, and the November New York, Philly and Kansas City Fed surveys, will be released this week.

----- Monday, November 15th -----
8:30 AM: The New York Fed Empire State manufacturing survey for November. The consensus is for a reading of 20.1, up from 10.5.

----- Tuesday, November 16th -----
8:30 AM ET: Retail sales for October will be released.

The consensus is for a 1.1% increase in retail sales.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).

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

This graph shows industrial production since 1967.

The consensus is for a 0.7% increase in Industrial Production, and for Capacity Utilization to increase to 75.7%.

10:00 AM: The November NAHB homebuilder survey. The consensus is for a reading of  80, unchanged from 80. Any number above 50 indicates that more builders view sales conditions as good than poor.

----- Wednesday, November 17th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

8:30 AM: Housing Starts for October.

This graph shows single and total housing starts since 1968.

The consensus is for 1.580 million SAAR, up from 1.555 million SAAR.

During the day: The AIA's Architecture Billings Index for October (a leading indicator for commercial real estate).

----- Thursday, November 18th -----
8:30 AM: The initial weekly unemployment claims report will be released.  The consensus is for 260 thousand initial claims, down from 267 thousand last week.

8:30 AM: the Philly Fed manufacturing survey for November. The consensus is for a reading of 24.0, up from 23.8.

11:00 AM: the Kansas City Fed manufacturing survey for November.

----- Friday, November 19th -----
10:00 AM: State Employment and Unemployment (Monthly) for October 2021 (And State Job Openings)

by Calculated Risk on 11/12/2021 05:29:00 PM

From Matthew Graham at MortgageNewsDaily: Mortgage Rates Are Actually Much Higher This Week

Click on graph for larger image.

This is a graph from Mortgage News Daily (MND) showing 30 year fixed rates from three sources (MND, MBA, Freddie Mac) since 2010.  

The 30 year fixed rate for top tier scenarios was 3.23% today, up from 3.02% last Friday.  This is still historically very low.

Go to MND and you can adjust the graph for different time periods.

by Calculated Risk on 11/12/2021 04:20:00 PM

The CDC is the source for all data.

According to the CDC, on Vaccinations.  Total doses administered: 437,352,000, as of a week ago 426,728,092, or 1.52 million doses per day.

COVID Metrics
	Today	Week Ago	Goal
Percent fully Vaccinated	58.7%	58.2%	≥70.0%1
Fully Vaccinated (millions)	194.7	193.2	≥2321
New Cases per Day3🚩	73,218	71,249	≤5,0002
Hospitalized3	39,359	41,692	≤3,0002
Deaths per Day3	999	1,101	≤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 5 states that have achieved 70% of total population fully vaccinated: Vermont at 71.9%, Rhode Island, Connecticut, Maine, and Massachusetts at 70.3% .

KUDOS also to the residents of the 16 states and D.C. that have achieved 60% of total population fully vaccinated: New York at 67.5%, , New Jersey, Maryland, Washington, Virginia, New Hampshire, Oregon, District of Columbia, New Mexico, Colorado, California, Minnesota, Pennsylvania,  Illinois, Delaware, Florida, and Hawaii at 60.3%.

The following 19 states have between 50% and 59.9% fully vaccinated: Wisconsin at 58.9%, Nebraska, Iowa, Utah, Michigan, Texas, Kansas, Arizona, Nevada, South Dakota, North Carolina, Alaska, Ohio, Kentucky, Montana, Oklahoma, South Carolina, Missouri and Indiana at 50.2%.

Next up (total population, fully vaccinated according to CDC) are Georgia at 48.8%, Tennessee at 48.8%, Arkansas at 48.6%, Louisiana at 48.2% and North Dakota 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 11/12/2021 12:13:00 PM

From BofA:

Our 3Q GDP tracking estimate increased to 2.5% qoq saar from 2.1%, following positive inventory revisions. We remain at 6.0% for 4Q [November 12 estimate]
emphasis added

From Goldman Sachs

We boosted our past-quarter GDP tracking estimate for Q3 by one tenth to +2.2% (qoq ar) but left our Q4 GDP tracking estimate unchanged at +4.5% (qoq ar). [November 10 estimate]

And from the Altanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2021 is 8.2 percent on November 10, down from 8.5 percent on November 4. [November 10 estimate]

by Calculated Risk on 11/12/2021 10:06:00 AM

From the BLS: Job Openings and Labor Turnover Summary

The number of job openings was little changed at 10.4 million on the last business day of September, the U.S. Bureau of Labor Statistics reported today. Hires and total separations were little changed at 6.5 million and 6.2 million, respectively. Within separations, the quits level and rate increased to a series high of 4.4 million and 3.0 percent, respectively. The layoffs and discharges rate was unchanged at 0.9 percent.
emphasis added

The following graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

This series started in December 2000.

Note: The difference between JOLTS hires and separations is similar to the CES (payroll survey) net jobs headline numbers. This report is for September, the most recent employment report was for October.

Click on graph for larger image.

Note that hires (dark blue) and total separations (red and light blue columns stacked) are usually pretty close each month. This is a measure of labor market turnover.  When the blue line is above the two stacked columns, the economy is adding net jobs - when it is below the columns, the economy is losing jobs.

The huge spike in layoffs and discharges in March  2020 are labeled, but off the chart to better show the usual data.

Jobs openings decreased in September to 10.438 million from 10.629 million in August.

The number of job openings (yellow) were up 58% year-over-year. 

Quits were up 34% year-over-year to a new record high. These are voluntary separations. (see light blue columns at bottom of graph for trend for "quits").

by Calculated Risk on 11/12/2021 08:29:00 AM

This data is as of November 9th.

From Andy Walden at Black Knight: Mortgage Loans in Forbearance Drop Below 2% Entering November

Forbearance plan exit volumes increased week-over-week heading into November as the share of mortgage loans in forbearance fell below 2% for the first time since the early stages of the pandemic.

According to our McDash Flash daily mortgage performance dataset, the number of loans in active forbearance fell 123,000 (-10.8%). The week’s strongest declines were among loans held in bank portfolios and private label securities, which recorded a reduction of 59,000 (-15.9%). FHA/VA plans also showed significant improvement, declining by 48,000 (-11.3), while GSE loans in forbearance plans decreased by 16,000 (-4.8%).

As of November 9, 1.01 million mortgage holders remain in COVID-19 related forbearance plans, representing 1.9% of all active mortgages, including 1.2% of GSE, 3.1% of FHA/VA and 2.4% of portfolio/PLS loans.

Click on graph for larger image.

Nearly 300,000 borrowers have left their plans over the past two weeks down from 455,000 over the same two-week period last month as we hit the downslope of exit activity. That said, more than 250,000 plans are still listed with October/November reviews for extension/removal. Half of those are expected to reach final expiration, which could lead to continued improvement, albeit at a slower pace, in the weeks ahead.

Plan entries were down 9% from a week ago, logging one of the lowest weeks in terms of new entries since the onset of the pandemic.
emphasis added

by Calculated Risk on 11/11/2021 08:01:00 PM

Friday:
• At 10:00 AM ET, Job Openings and Labor Turnover Survey for September from the BLS. Jobs openings decreased in August to 10.439 million from 11.098 million in July.

• Also at 10:00 AM, University of Michigan's Consumer sentiment index (Preliminary for November).