by Calculated Risk on 1/26/2025 12:01:00 PM

Most analysts expect no change to FOMC policy at the meeting this week, keeping the target range at 4 1/4 to 4 1/2 percent.    Market participants currently expect the FOMC to be on hold at the January, March and May meetings, with the next rate cut in May.

From BofA:

We expect the Fed to stay on hold at its January meeting. The focus will be on the March decision and the Trump agenda. Powell is likely to retain maximal optionality by continuing to stress data dependence and insist that the Fed will not pre-judge or preempt policy.
emphasis added

From Goldman:

The January FOMC meeting is unlikely to offer much new information. The statement might note that the labor market appears to have stabilized but is unlikely to provide strong guidance about the March meeting or the timeline for further cuts. ... Our baseline forecast calls for two 25bp cuts this year in June and December and one more in 2026 because we expect inflation to keep falling and do not expect tariffs to restrain the FOMC indefinitely.

Projections will not be released at this meeting. For review, here are the December projections.  

Since the last projections were released, economic growth has been above expectations, the unemployment rate was slightly below expectations, and inflation at expectations.  

The BEA's third estimate for Q3 GDP showed real growth at 3.1% annualized, following 3.0% annualized real growth in Q2, and 1.6% in Q1.  Current estimates for Q4 GDP are around 2.6%.  That would put real growth in 2024, Q4 over Q4, at 2.6% - above the top end of the December FOMC projections.  

GDP projections of Federal Reserve Governors and Reserve Bank presidents, Change in Real GDP1
Projection Date	2024	2025	2026	2027
Dec 2024	2.4 to 2.5	1.8 to 2.2	1.9 to 2.1	1.8 to 2.0
Sept 2024	1.9 to 2.1	1.8 to 2.2	1.9 to 2.3	1.8 to 2.1

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.

The unemployment rate was at 4.1% in December and average 4.15% for Q4.

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents, Unemployment Rate2
Projection Date	2024	2025	2026	2027
Dec 2024	4.2	4.2 to 4.5	4.1 to 4.4	4.0 to 4.4
Sept 2024	4.3 to 4.4	4.2 to 4.5	4.0 to 4.4	4.0 to 4.4

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

As of November 2024, PCE inflation increased 2.4 percent year-over-year (YoY). PCE inflation is expected to increase to 2.5% YoY in the December report.  This is in the December projection range.

Inflation projections of Federal Reserve Governors and Reserve Bank presidents, PCE Inflation1
Projection Date	2024	2025	2026	2027
Dec 2024	2.4 to 2.5	2.3 to 2.6	2.0-2.2	2.0
Sept 2024	2.2 to 2.4	2.1 to 2.2	2.0	2.0

PCE core inflation increased 2.8 percent YoY in November.  Core PCE inflation is expected to increase 2.8% YoY in the December report.  This is in the range of FOMC projections for Q4.

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents, Core Inflation1
Projection Date	2024	2025	2026	2027
Dec 2024	2.8 to 2.9	2.5 to 2.7	2.0-2.3	2.0
Sept 2024	2.6 to 2.7	2.1 to 2.3	2.0	2.0

by Calculated Risk on 1/25/2025 11:31:00 PM

Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

SPECIAL NOTE: The CDC has stopped releasing health data (hopefully temporarily).

For deaths, I'm currently using 4 weeks ago for "now", since the most recent three weeks will be revised significantly.

Note: "Effective May 1, 2024, hospitals are no longer required to report COVID-19 hospital admissions, hospital capacity, or hospital occupancy data."  So I'm no longer tracking hospitalizations.

COVID Metrics
	Now	Week Ago	Goal
Deaths per Week	518	524	≤3501
1my goals to stop weekly posts. 🚩 Increasing number weekly for Deaths. ✅ Goal met.

Click on graph for larger image.

This graph shows the weekly (columns) number of deaths reported since Jan 2020.

Although weekly deaths met the original goal to stop posting, I'm continuing to post now that deaths are above the goal again - and at a minimum, I'll continue to post through the Winter.  

Weekly deaths have mostly been declining, however weekly deaths are still above the low of 313 in early June 2024.

And here is a graph I'm following concerning COVID in wastewater as of January 23rd:

This appears to be a leading indicator for COVID hospitalizations and deaths.

Nationally COVID in wastewater is "Moderate" according to the CDC but is now declining.   

by Calculated Risk on 1/25/2025 02:11:00 PM

At the Calculated Risk Real Estate Newsletter this week:

Click on graph for larger image.

• NAR: Existing-Home Sales Increased to 4.24 million SAAR in December

• NMHC on Apartments: "Looser market conditions for the tenth consecutive quarter

• 1.73 million Total Housing Completions in 2024 including Manufactured Homes; Most Since 2006

• 4th Look at Local Housing Markets in December

• 3rd Look at Local Housing Markets in December

This is usually published 4 to 6 times a week and provides more in-depth analysis of the housing market.

by Calculated Risk on 1/25/2025 08:11:00 AM

The key reports scheduled for this week are the advance estimate of Q4 GDP, December New Home sales, December Personal Income and Outlays and November Case-Shiller house prices.

The FOMC meets this week, and no change to policy is expected.

----- Monday, January 27th -----
8:30 AM: Chicago Fed National Activity Index for December. This is a composite index of other data.

10:00 AM: New Home Sales for December from the Census Bureau.

This graph shows New Home Sales since 1963.

The dashed line is the sales rate for last month.

The consensus is for 670 thousand SAAR, up from 664 thousand in November.

10:30 AM: Dallas Fed Survey of Manufacturing Activity for January.

----- Tuesday, January 28th -----
8:30 AM: Durable Goods Orders for December. The consensus is for a 0.8% increase in durable goods.

9:00 AM: FHFA House Price Index for November. This was originally a GSE only repeat sales, however there is also an expanded index.

9:00 AM ET: S&P/Case-Shiller House Price Index for November.

This graph shows the Year over year change in the nominal seasonally adjusted National Index, Composite 10 and Composite 20 indexes through the most recent report (the Composite 20 was started in January 2000).

The National Index was up 3.6% YoY in October and is expected to be up about the same in November.

10:00 AM: Richmond Fed Survey of Manufacturing Activity for January. This is the last of the regional Fed manufacturing surveys for January.

10:00 AM: State Employment and Unemployment (Monthly) for December 2024

----- Wednesday, January 29th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index.

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

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

----- Thursday, January 30th -----
8:30 AM: Gross Domestic Product, 4th quarter and Year 2024 (Advance estimate). The consensus is that real GDP increased 2.6% annualized in Q4.

8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for a increase to 228 thousand from 223 thousand last week.

10:00 AM: Pending Home Sales Index for December. The consensus is for a 1.0% decrease in the index.

----- Friday, January 31st -----
8:30 AM ET: Personal Income and Outlays for December. The consensus is for a 0.4% increase in personal income, and for a 0.5% increase in personal spending. And for the Core PCE price index to increase 0.2%.  PCE prices are expected to be up 2.5% YoY, and core PCE prices up 2.8% YoY.

9:45 AM: Chicago Purchasing Managers Index for January. The consensus is for a reading of 39.7, up from 36.9 in December.

by Calculated Risk on 1/24/2025 05:10:00 PM

From BofA:

Since our last weekly publication, our 4Q GDP tracking estimate has moved up two-tenths to 2.3% q/q saar. [Jan 24th estimate]
emphasis added

From Goldman:

We left our Q4 GDP tracking and domestic final sales estimates unchanged, each at +2.6% (quarter-over-quarter annualized). [Jan 24th estimate]

And from the Atlanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2024 is 3.0 percent on January 17, unchanged from January 16 after rounding. [Jan 17th estimate]

by Calculated Risk on 1/24/2025 02:11:00 PM

From WardsAuto: Some Letdown but January U.S. Light-Vehicle Sales Continue Q4-2024's Growth (pay content).  Brief excerpt:

While demand in the middle of the month was negatively impacted by extreme weather conditions across most of the country, with a week remaining in January there is upside to the outlook. On the flipside, there could be pause among some consumers, as they wait to see how the apparent revamping of federal policies and institutions by the new administration plays out. Regardless, sales are tracking to their fourth straight increase in January.
emphasis added

Click on graph for larger image.

This graph shows actual sales from the BEA (Blue), and Wards forecast for January (Red).

On a seasonally adjusted annual rate basis, the Wards forecast of 15.6 million SAAR, would be down 7.1% from last month, and up 3.8% from a year ago.

by Calculated Risk on 1/24/2025 10:49:00 AM

Today, in the CalculatedRisk Real Estate Newsletter: NAR: Existing-Home Sales Increased to 4.24 million SAAR in December

Excerpt:

Sales in December (4.24 million SAAR) were up 2.2% from the previous month and were 9.3% above the December 2023 sales rate. This was the third consecutive month with a year-over-year increase after declining YoY every month for over 3 years.
...
Sales Year-over-Year and Not Seasonally Adjusted (NSA)

The fourth graph shows existing home sales by month for 2023 and 2024.

Sales increased 9.3% year-over-year compared to December 2023. On an annual basis, existing home sales were at 4.06 million in 2024, down from 4.09 million in 2023, and the lowest level since 1995.

There is much more in the article.

by Calculated Risk on 1/24/2025 10:00:00 AM

From the NAR: Existing-Home Sales Ascended 2.2% in December

Existing-home sales climbed in December, according to the National Association of Realtors®. Sales advanced in three major U.S. regions and slipped in the Midwest. Year-over-year, sales accelerated in all four regions.

On an annual basis, existing-home sales (4.06 million) declined to the lowest level since 1995, while the median price reached a record high of $407,500 in 2024.

Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – elevated 2.2% from November to a seasonally adjusted annual rate of 4.24 million in December. Year-over-year, sales swelled 9.3% (up from 3.88 million in December 2023).
...
Total housing inventory registered at the end of December was 1.15 million units, down 13.5% from November but up 16.2% from one year ago (990,000). Unsold inventory sits at a 3.3-month supply at the current sales pace, down from 3.8 months in November but up from 3.1 months in December 2023.
emphasis added

Click on graph for larger image.

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1994.

Sales in December (4.24 million SAAR) were up 2.2% from the previous month and were 9.3% above the December 2023 sales rate.  This was the third consecutive year-over-year increase after declining YoY every month for over 3 years.

The second graph shows nationwide inventory for existing homes.

According to the NAR, inventory decreased to 1.15 million in December from 1.33 million the previous month.

Headline inventory is not seasonally adjusted, and inventory usually decreases to the seasonal lows in December and January, and peaks in mid-to-late summer.

The last graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.

Inventory was up 16.2% year-over-year (blue) in December compared to December 2023.

Months of supply (red) decreased to 3.3 months in December from 3.8 months the previous month.

The sales rate was above the consensus forecast.  I'll have more later. 

by Calculated Risk on 1/24/2025 08:11:00 AM

Container traffic gives us an idea about the volume of goods being exported and imported - and usually some hints about the trade report since LA area ports handle about 40% of the nation's container port traffic.

The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).

To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12-month average.

Click on graph for larger image.

On a rolling 12-month basis, inbound traffic increased 1.7% in December compared to the rolling 12 months ending in November.   Outbound traffic decreased 0.5% compared to the rolling 12 months ending the previous month.

The 2nd graph is the monthly data (with a strong seasonal pattern for imports).

Usually imports peak in the July to October period as retailers import goods for the Christmas holiday and then decline sharply and bottom in the Winter depending on the timing of the Chinese New Year.  

Imports were up 24% YoY in December, and exports were down 6% YoY.    

This was a very strong July through December period as importers were likely stockpiling goods prior to the increase in tariffs. 

by Calculated Risk on 1/23/2025 08:49:00 PM

Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

Friday:
• At 10:00 AM ET, Existing Home Sales for December from the National Association of Realtors (NAR). The consensus is for 4.20 million SAAR, up from 4.15 million.

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