by Calculated Risk on 5/06/2025 02:01:00 PM
Tuesday, May 06, 2025
TSA: Airline Travel Unchanged YoY
Anecdotally, I've heard that airlines ticket prices are falling. That suggests less travel. Also, the Real ID restrictions go in place tomorrow, and that might impact domestic airline travel.
This is also something to watch with less international travel.
This data is as of May 5, 2025.
This data shows the 7-day average of daily total traveler throughput from the TSA (Blue).
The red line is the percent of 2019 for the seven-day average. Air travel - as a percent of 2019 - is up about 4% from pre-pandemic levels.
Asking Rents Mostly Unchanged Year-over-year
by Calculated Risk on 5/06/2025 10:29:00 AM
Today, in the Real Estate Newsletter: Asking Rents Mostly Unchanged Year-over-year
Brief excerpt:
Another monthly update on rents.This is much more in the article.
Tracking rents is important for understanding the dynamics of the housing market. Slower household formation and increased supply (more multi-family completions) has kept asking rents under pressure.
More recently, immigration policy has become a negative for rentals.
Apartment List: Asking Rent Growth -0.3% Year-over-year ...
On the supply side of the rental market, our national vacancy index ticked up to 7 percent, setting a new record high in the history of that monthly data series, which goes back to the start of 2017. After a historic tightening in 2021, multifamily occupancy has been slowly but consistently easing for over three years amid an influx of new inventory. 2024 saw the most new apartment completions since the mid-1980s, and although we’re past the peak of new multifamily construction, this year is still expected to bring a robust level of new supply.Realtor.com: 20th Consecutive Month with Year-over-year Decline in RentsIn March 2025, the U.S. median rent recorded its 20th consecutive year-over-year decline, dropping 1.2% for 0-2 bedroom properties across the 50 largest metropolitan areas.
Trade Deficit increased to $140.5 Billion in March
by Calculated Risk on 5/06/2025 08:30:00 AM
The Census Bureau and the Bureau of Economic Analysis reported:
The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $140.5 billion in March, up $17.3 billion from $123.2 billion in February, revised.
March exports were $278.5 billion, $0.5 billion more than February exports. March imports were $419.0 billion, $17.8 billion more than February imports.
emphasis added
Exports and imports increased in March.
Exports were up 6.7% year-over-year; imports were up 27.1% year-over-year.
Exports have generally increased recently, and imports increased sharply as importers rushed to beat tariffs.
The second graph shows the U.S. trade deficit, with and without petroleum.
Note that net, exports of petroleum products are positive and have been increasing.
The trade deficit with China increased to $17.9 billion from $17.2 billion a year ago.
Monday, May 05, 2025
Tuesday: Trade Balance
by Calculated Risk on 5/05/2025 07:15:00 PM
From Matthew Graham at Mortgage News Daily: Mortgage Rates Roughly Unchanged to Start New Week
Mortgage rates faced a slight headwind on Monday as economic data caused weakness in the bond market. This would typically result in higher mortgage rates, but in today's case, the damage was minimal.Tuesday:
One thing to keep in mind is that mortgage rates don't change in real time with the market. Lenders set rates once in the morning and only change them when the bond market experiences a certain threshold of volatility. A small handful of lenders met that threshold and ended up raising rates this afternoon, but the average lender remained right in line with Friday. [30 year fixed 6.82%]
emphasis added
• At 8:30 AM: Trade Balance report for March from the Census Bureau. The consensus is the trade deficit to be $129.0 billion. The U.S. trade deficit was at $122.7 billion in February as importers rushed to beat the tariffs.
Recession Watch Metrics
by Calculated Risk on 5/05/2025 02:14:00 PM
Early in February, I expressed my "increasing concern" about the negative economic impact of "executive / fiscal policy errors", however, I concluded that post by noting that I was not currently on recession watch.
"We should be looking to trade with the rest of the world, and we should do what we do best, and they should do what they do best ... Trade should not be a weapon.”In the short term, it is mostly trade policy that will negatively impact the economy. However, there are several policies that will negatively impact the economy in the long run, and I'll discuss those later.
The Sahm Rule was at 0.27 in March (Last data at FRED) and increased to 0.30 in April.
ICE Mortgage Monitor: Home Prices Continue to Cool
by Calculated Risk on 5/05/2025 11:56:00 AM
Today, in the Real Estate Newsletter: ICE Mortgage Monitor: Home Prices Continue to Cool
Brief excerpt:
House Price Growth Continues to SlowThere is much more in the newsletter.
Here is the year-over-year in house prices according to the ICE Home Price Index (HPI). The ICE HPI is a repeat sales index. ICE reports the median price change of the repeat sales. The index was up 2.4% year-over-year in March, down from 3.5% YoY in February. The early look at the April HPI shows a 1.9% YoY increase.
• Improved inventory levels are providing more options and a softer price dynamic for homeowners shopping this springThere is much more in the mortgage monitor.
• Annual home price growth cooled to a revised +2.4% in March from +3.5% at the start of the year, with an early look at April data via ICE’s enhanced Home Price Index suggesting price growth has cooled further to +1.9% which would mark the slowest growth rate in nearly two years
• Early April data also shows home prices rose by a modest 0.1% in the month on a seasonally adjusted basis, which would mark the softest single month growth since late 2023 when mortgage rates had climbed above 7.5%
• If recent seasonally adjusted gains persist, the annual home price growth rate would cool further in Q2
• Single family prices were up by +2.1% from the same time last year, with condos down -0.4%, marking the first such annual decline since 2012
• All in, nearly half of major markets are seeing condo prices down from last years levels, with the largest declines in Florida, especially in areas heavily impacted by last year’s hurricanes
ISM® Services Index Increased to 51.6% in April
by Calculated Risk on 5/05/2025 10:00:00 AM
(Posted with permission). The ISM® Services index was at 51.6%, up from 50.8% last month. The employment index increased to 49.0%, from 46.2%. Note: Above 50 indicates expansion, below 50 in contraction.
From the Institute for Supply Management: Services PMI® at 51.6% April 2025 Services ISM® Report On Business®
Economic activity in the services sector expanded for the 10th consecutive month in April, say the nation's purchasing and supply executives in the latest Services ISM® Report On Business®. The Services PMI® registered 51.6 percent, indicating expansion for the 56th time in 59 months since recovery from the coronavirus pandemic-induced recession began in June 2020.This was below consensus expectations.
The report was issued today by Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: “In April, the Services PMI® registered 51.6 percent, 0.8 percentage point higher than the March figure of 50.8 percent. The Business Activity Index registered 53.7 percent in April, 2.2 percentage points lower than the 55.9 percent recorded in March. This is the index’s 59th consecutive month of expansion. The New Orders Index recorded a reading of 52.3 percent in April, 1.9 percentage points higher than the March figure of 50.4 percent. The Employment Index stayed in contraction territory for the second month in a row; the reading of 49 percent is a 2.8-percentage point increase compared to the 46.2 percent recorded in March.
“The Supplier Deliveries Index registered 51.3 percent, 0.7 percentage point higher than the 50.6 percent recorded in March. This is the fifth consecutive month that the index has been in expansion territory, indicating slower supplier delivery performance. (Supplier Deliveries is the only ISM® Report On Business® index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.)
“The Prices Index registered 65.1 percent in April, a 4.2-percentage point increase from March’s reading of 60.9 percent and a fifth consecutive reading above 60 percent. The Inventories Index registered its third consecutive month in expansion territory in April, registering 53.4 percent, an increase of 3.1 percentage points from March’s figure of 50.3 percent. The Inventory Sentiment Index expanded for the 24th consecutive month, registering 56.1 percent, down 0.5 percentage point from March’s reading of 56.6 percent. The Backlog of Orders Index registered 48 percent in April, a 0.6-percentage point increase from the March figure of 47.4 percent, indicating contraction for the eighth time in the last nine months.
“Eleven industries reported growth in April, a drop of three from the 14 industries reported in January and February. The Services PMI® has expanded in 55 of the last 58 months dating back to June 2020. The April reading of 51.6 percent is 1 percentage point below the 12-month average reading of 52.6 percent.”
Miller continues, “April’s change in indexes was a reversal of March’s direction, with increases in three (New Orders, Employment and Supplier Deliveries) of the four subindexes that directly factor into the Services PMI®. Of those four, only the Business Activity Index had a lower reading compared to March. Employment continues to be the only one of these subindexes in contraction territory, with two straight months of contraction. From December through February, all four subindexes were in expansion. Regarding tariffs, respondents cited actual pricing impacts as concerns, more so than uncertainty and future pressures. Respondents continue to mention federal agency budget cuts as a drag on business, but overall, results are improving.”
emphasis added
Housing May 4th Weekly Update: Inventory up 2.1% Week-over-week, Up 32.9% Year-over-year
by Calculated Risk on 5/05/2025 08:11:00 AM
Sunday, May 04, 2025
Monday: ISM Services
by Calculated Risk on 5/04/2025 06:13:00 PM
Weekend:
• Schedule for Week of May 4, 2025
Monday:
• At 10:00 AM ET, the ISM Services Index for April. The consensus is for a reading of 50.6, down from 50.8.
From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are down 12 and DOW futures are down 80 (fair value).
Oil prices were down over the last week with WTI futures at $58.29 per barrel and Brent at $61.29 per barrel. A year ago, WTI was at $80, and Brent was at $84 - so WTI oil prices are down about 27% year-over-year.
Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.14 per gallon. A year ago, prices were at $3.63 per gallon, so gasoline prices are down $0.49 year-over-year.
FOMC Preview: No Change to Fed Funds Rate
by Calculated Risk on 5/04/2025 09:22:00 AM
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 also be on hold at the June meeting, with the next rate cut in July, and one or two more rate cuts later in the year.
The May FOMC meeting looks like a placeholder: policy rates on hold and no change in Chair Powell’s tone from his recent speeches. He will probably reiterate that the Fed is assessing the total impact of all policy changes by the Trump Administration, not just trade policy in isolation. We think the bar for a June cut is high, but Powell is unlikely to rule it out at this stage.
emphasis added
GDP projections of Federal Reserve Governors and Reserve Bank presidents, Change in Real GDP1 | ||||
---|---|---|---|---|
Projection Date | 2025 | 2026 | 2027 | |
Mar 2025 | 1.5 to 1.9 | 1.6 to 1.9 | 1.6 to 2.0 | |
Dec 2024 | 1.8 to 2.2 | 1.9 to 2.1 | 1.8 to 2.0 |
The unemployment rate was at 4.2% in April and after averaging 4.1% for Q1. The forecast for the Q4 unemployment rate is likely low.
Unemployment projections of Federal Reserve Governors and Reserve Bank presidents, Unemployment Rate2 | ||||
---|---|---|---|---|
Projection Date | 2025 | 2026 | 2027 | |
Mar 2025 | 4.3 to 4.4 | 4.2 to 4.5 | 4.1 to 4.4 | |
Dec 2024 | 4.2 to 4.5 | 4.1 to 4.4 | 4.0 to 4.4 |
As of March 2025, PCE inflation increased 2.3 percent year-over-year (YoY). There will likely be some increase in PCE inflation from policy, but this appears to in the forecast range.
Inflation projections of Federal Reserve Governors and Reserve Bank presidents, PCE Inflation1 | ||||
---|---|---|---|---|
Projection Date | 2025 | 2026 | 2027 | |
Mar 2025 | 2.6 to 2.9 | 2.1 to 2.3 | 2.0 to 2.1 | |
Dec 2024 | 2.3 to 2.6 | 2.0-2.2 | 2.0 |
PCE core inflation increased 2.6 percent YoY in March. 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 | 2025 | 2026 | 2027 | |
Mar 2025 | 2.7 to 3.0 | 2.1 to 2.4 | 2.0 to 2.1 | |
Dec 2024 | 2.5 to 2.7 | 2.0-2.3 | 2.0 |