by Calculated Risk on 5/02/2025 03:42:00 PM

From BofA (forecast, not tracking):

GDP contracted by 0.3% q.q saar in 1Q, despite solid final demand (+2.3%). In our assessment, the surge in imports (which took 5.0pp off 1Q growth) due to front-running of tariffs was only partially reflected in stronger inventories and final demand. So we have revised our 2Q GDP forecast to reflect a reversal of this dynamic. We now expect 2.0% headline GDP growth (vs. 0.9% previously), but with weaker final domestic sales. [May 2nd estimate]
emphasis added

From Goldman:

We launched our Q2 GDP tracking estimate at +2.4% (quarter-over-quarter annualized) and our Q2 domestic final sales estimate at +0.6%. [May 1st estimate]

And from the Atlanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2025 is 1.1 percent on May 1, down from 2.4 percent on April 30. After this morning’s releases from the US Census Bureau and the Institute for Supply Management, the nowcast of second-quarter real personal consumption expenditures growth and real private fixed investment growth fell from 3.3 percent and 1.4 percent, respectively, to 1.9 percent and -0.7 percent. [May 1st estimate]

Weekly Schedule

by Calculated Risk on 5/02/2025 01:35:00 PM

This graph shows heavy truck sales since 1967 using data from the BEA. The dashed line is the April 2025 seasonally adjusted annual sales rate (SAAR) of 505 thousand.

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 record high of 570 thousand SAAR in April 2019.

Click on graph for larger image.

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

Heavy truck sales declined sharply at the beginning of the pandemic, falling to a low of 288 thousand SAAR in May 2020.  

Heavy truck sales were at 505 thousand SAAR in April, up from 450 thousand in March, and up 0.8% from 501 thousand SAAR in April 2025 (essentially unchanged YoY).  

Year-to-date (NSA) sales are down 4.6%.

Usually, heavy truck sales decline sharply prior to a recession and sales were solid in April.  It is likely that some April truck buyers rushed to beat the tariffs - and we might see some weakness next month.

As I mentioned yesterday, light vehicle sales were strong in April at 17.27 million SAAR as some buyers rushed to beat the tariffs.

The second graph shows light vehicle sales since the BEA started keeping data in 1967.  

Light vehicle sales were at 17.27 million SAAR in April, down 3.1% from March, and up 7.8% from April 2024.

by Calculated Risk on 5/02/2025 11:04:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Fannie and Freddie: Single Family Serious Delinquency Rates Decreased in March

Excerpt:

Freddie Mac reported that the Single-Family serious delinquency rate in March was 0.59%, down from 0.61% February. Freddie's rate is up year-over-year from 0.52% in March 2024, however, this is close to the pre-pandemic level of 0.60%.

Freddie's serious delinquency rate peaked in February 2010 at 4.20% following the housing bubble and peaked at 3.17% in August 2020 during the pandemic.

Fannie Mae reported that the Single-Family serious delinquency rate in March was 0.56%, down from 0.57% in February. The serious delinquency rate is up year-over-year from 0.51% in March 2024, however, this is below the pre-pandemic lows of 0.65%.

The Fannie Mae serious delinquency rate peaked in February 2010 at 5.59% following the housing bubble and peaked at 3.32% in August 2020 during the pandemic.

There is much more in the article.

by Calculated Risk on 5/02/2025 09:10:00 AM

The headline jobs number in the April employment report was above expectations, however, February and March payrolls were revised down by 58,000 combined.   The participation rate and the employment population ratio increased, and the unemployment rate was unchanged at 4.2%.

Earlier: April Employment Report: 177 thousand Jobs, 4.2% Unemployment Rate

Prime (25 to 54 Years Old) Participation

Since the overall participation rate is impacted by both cyclical (recession) 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 years old participation rate increased in April to 83.6% from 83.3% in March.

The 25 to 54 employment population ratio increased to 80.7% from 80.4% the previous month.

Both are down slightly from the recent peaks, but still near the highest level this millennium.

Average Hourly Wages

The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees from the Current Employment Statistics (CES).  

There was a huge increase at the beginning of the pandemic as lower paid employees were let go, and then the pandemic related spike reversed a year later.

Wage growth has trended down after peaking at 5.9% YoY in March 2022 and was at 3.8% YoY in April.   

Part Time for Economic Reasons

From the BLS report:

"The number of people employed part time for economic reasons, at 4.7 million, changed little in April. These individuals would have preferred full-time employment but were working part time because their hours had been reduced or they were unable to find full-time jobs."

The number of persons working part time for economic reasons decreased in April to 4.69 million from 4.78 million in March.  This is above the pre-pandemic levels.

These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 7.8% from 7.9% in the previous month. This is down from the record high in April 2020 of 22.9% and up from the lowest level on record (seasonally adjusted) in December 2022 (6.6%). (This series started in 1994). This measure is above the 7.0% level in February 2020 (pre-pandemic).

Unemployed over 26 Weeks

This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 1.46 million workers who have been unemployed for more than 26 weeks and still want a job, up from 1.44 million the previous month.

This is down from post-pandemic high of 4.171 million, and up from the recent low of 1.056 million.

This is above pre-pandemic levels.

Job Streak

Through April 2025, the employment report indicated positive job growth for 52 consecutive months, putting the current streak in 2nd place of the longest job streaks in US history (since 1939).  

Headline Jobs, Top 10 Streaks
	Year Ended	Streak, Months
1	2020	113
2	Current, N/A	521
3	1990	48
4	2007	46
5	1979	45
6 tie	1943	33
6 tie	1986	33
6 tie	2000	33
9	1967	29
10	1995	25
1Currrent Streak

Summary:

The headline jobs number in the April employment report was above expectations, however, February and March payrolls were revised down by 58,000 combined.   The participation rate and employment population ratio increased, and the unemployment rate was unchanged at 4.2%.

This was a solid employment report.

by Calculated Risk on 5/02/2025 08:30:00 AM

From the BLS: Employment Situation

Total nonfarm payroll employment increased by 177,000 in April, and the unemployment rate was unchanged at 4.2 percent, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in health care, transportation and warehousing, financial activities, and social assistance. Federal government employment declined.
...
The change in total nonfarm payroll employment for February was revised down by 15,000, from +117,000 to +102,000, and the change for March was revised down by 43,000, from +228,000 to +185,000. With these revisions, employment in February and March combined is 58,000 lower than previously reported.
emphasis added

Click on graph for larger image.

The first graph shows the jobs added per month since January 2021.

Total payrolls increased by 177 thousand in April.  Private payrolls increased by 167 thousand, and public payrolls increased 10 thousand (Federal payrolls decreased 9 thousand).

Payrolls for February and March were revised down by 58 thousand, combined.

The second graph shows the year-over-year change in total non-farm employment since 1968.

In April, the year-over-year change was 1.88 million jobs.  Employment was up solidly year-over-year.

The third graph shows the employment population ratio and the participation rate.

The Labor Force Participation Rate increased to 62.6% in April, from 62.5% in March. This is the percentage of the working age population in the labor force.

The Employment-Population ratio increased to 60.0% from 59.9% in March (blue line).

I'll post the 25 to 54 age group employment-population ratio graph later.

The fourth graph shows the unemployment rate.

The unemployment rate was unchanged at 4.2% in April from 4.2% in March.

This was above consensus expectations; however, February and March payrolls were revised down by 58,000 combined.  

I'll have more later ...

by Calculated Risk on 5/01/2025 09:04:00 PM

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

Thursday:
• At 8:30 AM ET, Employment Report for April.   The consensus is for 130,000 jobs added, and for the unemployment rate to be unchanged at 4.2%.

by Calculated Risk on 5/01/2025 05:08:00 PM

Wards Auto released their estimate of light vehicle sales for April: Tariff-Induced Buying Pumps U.S. Light-Vehicle Sales for Second Month in April (pay site).

Tariff-related buying lifted sales over the past two months to a seasonally adjusted annual selling rate of 17.6 million, well above the roughly 16.0 million they would have totaled otherwise. There was some indication that the surge was decelerating by the end of the month, probably due to tariff “exuberance” starting to dry up and because of a drain to inventory. There was more strength, in general, in demand for fullsize and luxury-segment trucks than for more affordable vehicles, including cars and small and midsize CUVs and SUVs.

Click on graph for larger image.

This graph shows light vehicle sales since 2006 from the BEA (blue) and Wards' estimate for April (red).

Sales in April (17.27 million SAAR) were down 2.8% from March, and up 7.7% from April 2024.

Sales in April were above the consensus forecast.

The second graph shows light vehicle sales since the BEA started keeping data in 1967.

This "beat the tariff" induced surge in buying was the best April since 2021.

by Calculated Risk on 5/01/2025 03:05:00 PM

On Friday at 8:30 AM ET, the BLS will release the employment report for April. The consensus is for 130,000 jobs added, and for the unemployment rate to be unchanged at 4.2%. There were 228,000 jobs added in March, and the unemployment rate was at 4.2%.

From Goldman Sachs:

We forecast that payrolls rose 140k in April (vs. consensus +130k) and the unemployment rate was flat at 4.2%. ... Big data indicators suggest slower but still healthy job growth in April. We expect a 15k decline in federal government payrolls and a slower but still positive 15k increase in state and local payrolls. We think April was probably too early to see large negative trade war or policy uncertainty effects on hiring.
emphasis added

From BofA:

Apr payrolls are likely to rise by a robust 165k, higher than consensus expectations of 130k. Government job growth is expected to come in at 10k due to the federal hiring freeze/DOGE. Given the muted claims data in the survey week, we do not expect DOGE driven job cuts to be a sizable drag. Immigration restrictions are likely to weigh on payrolls in the coming months but we don’t think they’ll have a substantial impact in Apr. That said, risks are to the downside. We expect the u-rate to remain at 4.2%.

• ADP Report: The ADP employment report showed 62,000 private sector jobs were added in April.  This was well below consensus forecasts and suggests job gains below consensus expectations, however, in general, ADP hasn't been very useful in forecasting the BLS report.

• ISM Surveys: Note that the ISM indexes are diffusion indexes based on the number of firms hiring (not the number of hires).  The ISM® manufacturing employment index 46.5%, up from 44.7% the previous month.   This would suggest about 40,000 jobs lost in manufacturing. The ADP report indicated 4,000 manufacturing jobs added in April.

The ISM® services employment index will be released next week.

• Unemployment Claims: The weekly claims report showed about the same initial unemployment claims during the reference week at 216,000 inApril compared to 225,000 in March.  This suggests layoffs in April were about the same or a little less as in March.

• Conclusion: Over the last year, employment gains averaged 157 thousand per month - and that was probably the trend prior to policy changes.  It still seems early for the government (DOGE) layoffs and tariff related layoffs to impact the employment report.   However, my guess is we will start to see the impact of policy uncertainty impacting employment - a little - and I'll take the under for April.

by Calculated Risk on 5/01/2025 01:15:00 PM

Today, in the Calculated Risk Real Estate Newsletter: Inflation Adjusted House Prices 0.8% Below 2022 Peak

Excerpt:

It has been over 18 years since the housing bubble peak. In the February Case-Shiller house price index released this week, the seasonally adjusted National Index (SA), was reported as being 79% above the bubble peak in 2006. However, in real terms, the National index (SA) is about 12% above the bubble peak (and historically there has been an upward slope to real house prices). The composite 20, in real terms, is 3% above the bubble peak.

People usually graph nominal house prices, but it is also important to look at prices in real terms. As an example, if a house price was $300,000 in January 2010, the price would be $441,000 today adjusted for inflation (47% increase). That is why the second graph below is important - this shows "real" prices.

The third graph shows the price-to-rent ratio, and the fourth graph is the affordability index. The last graph shows the 5-year real return based on the Case-Shiller National Index.
...
The second graph shows the same two indexes in real terms (adjusted for inflation using CPI).

In real terms (using CPI), the National index is 0.8% below the recent peak, and the Composite 20 index is 1.1% below the recent peak in 2022.

Both the real National index and the Comp-20 index increased slightly in February.

It has now been 33 months since the real peak in house prices. Typically, after a sharp increase in prices, it takes a number of years for real prices to reach new highs (see House Prices: 7 Years in Purgatory)

There is much more in the article!

by Calculated Risk on 5/01/2025 10:17:00 AM

From the Census Bureau reported that overall construction spending decreased:

Construction spending during March 2025 was estimated at a seasonally adjusted annual rate of $2,196.1 billion, 0.5 percent below the revised February estimate of $2,206.9 billion. The March figure is 2.8 percent above the March 2024 estimate of $2,135.8 billion.
emphasis added

Both private and public spending increased:

Spending on private construction was at a seasonally adjusted annual rate of $1,688.0 billion, 0.6 percent below the revised February estimate of $1,697.7 billion. ...

In March, the estimated seasonally adjusted annual rate of public construction spending was $508.1 billion, 0.2 percent below the revised February estimate of $509.2 billion.

Click on graph for larger image.

This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.

Private residential (red) spending is 4.4% below the peak in 2022.

Private non-residential (blue) spending is 0.8% below the peak in February 2025.

Public construction spending (orange) is slightly 0.2% the peak the previous month.

The second graph shows the year-over-year change in construction spending.

On a year-over-year basis, private residential construction spending is up 2.8%. Private non-residential spending is up 1.6% year-over-year. Public spending is up 4.7% year-over-year.

This was below consensus expectations; however, spending for the previous two months was revised up.