by Calculated Risk on 4/23/2009 08:49:00 AM

The DOL reports on weekly unemployment insurance claims:

In the week ending April 18, the advance figure for seasonally adjusted initial claims was 640,000, an increase of 27,000 from the previous week's revised figure of 613,000. The 4-week moving average was 646,750, a decrease of 4,250 from the previous week's unrevised average of 651,000.
...
The advance number for seasonally adjusted insured unemployment during the week ending April 11 was 6,137,000, an increase of 93,000 from the preceding week's revised level of 6,044,000.

Click on graph for larger image in new window.

The first graph shows weekly claims and continued claims since 1971.

The four week moving average is at 646,750.

Continued claims are now at 6.14 million - the all time record.

The second graph shows the 4-week average of initial weekly unemployment claims (blue, right scale), and total insured unemployed (red, left scale), both as a percent of covered employment.

This normalizes the data for changes in insured employment, and shows the initial unemployment and continued claims are both at the highest level since the early '80s.

This is another very weak report and shows continued weakness for employment.

by Calculated Risk on 4/22/2009 11:16:00 PM

I'm surprised this is playing out in public ...

First the government offered $1.0 billion, and no equity interest in the new Chrysler, to a consortium of debtholders (mostly banks with pier loans: JPMorgan Chase, Goldman Sachs, Morgan Stanley and Citigroup).

The banks countered with $4.5 billion, and a 40% equity interest.

From CNBC: Treasury Raises Offer to Chrysler Lenders

Treasury has offered the lenders $1.5 billion of first-lien debt and a 5 percent equity stake in a restructured Chrysler ...

It will be interesting to see if the banks budge (and by how much). They claim they can get more than 65 cents on the dollar in liquidation - or $4.5 billion. Just 7 more days ...

by Calculated Risk on 4/22/2009 06:53:00 PM

From Bloomberg: U.S. May Reveal Each Bank’s Capital Needs After Tests

The Obama administration may direct banks that are judged to be short of capital after stress tests to disclose how they are going to get additional funds when the government reveals the results on May 4, according to a person familiar with the matter.

The government would release a bank-by-bank assessment, while the lenders would say how they plan to shore up their finances ...

Regulators conducting the stress tests are increasingly focusing on the quality of loans banks made after finding wide variations in underwriting standards...

It only makes sense for banks short of capital to explain how they will raise the additional funds. The answer will probably be more money from the TARP!

On the variations in quality of loans, just look at the DataQuick delinquency report earlier today - even when you account for subprime vs. prime lenders, there was a clearly a wide disparity in underwriting standards. Hopefully this wasn't a surprise to the regulators.

by Calculated Risk on 4/22/2009 05:55:00 PM

From the Census Bureau: Residential Mover Rate in U.S. is Lowest Since Census Bureau Began Tracking in 1948

The U.S. Census Bureau announced today that the national mover rate declined from 13.2 percent in 2007 to 11.9 percent in 2008 — the lowest rate since the bureau began tracking these data in 1948.

In 2008, 35.2 million people 1 year and older changed residences in the U.S. within the past year, representing a decrease from 38.7 million in 2007 and the smallest number of residents to move since 1962.

Click on graph for larger image in new window.

This graph shows the percent of people that moved to a different county - in the same states or to another state.

Note: data is missing for a few years in the mid-70s.

The recent collapse is probably related to the housing bust. It is very difficult for homeowners with negative equity to move.

From the NY Times today: As Housing Market Dips, More in U.S. Are Staying Put

The declines appeared to be directly related to the housing slump and the recession.

“It represents a perfect storm halting migration at all levels, since it involves deterrents in local housing-related moves and longer distance employment-related moves,” said William H. Frey, a demographer with the Brookings Institution.

For a few earlier posts on the housing bust and mobility:

More on the Housing Bust and Labor Mobility June 2008

Research: Housing Busts and Household Mobility October 2008

by Calculated Risk on 4/22/2009 03:56:00 PM

From Paul Kasriel and Asha Bangalore at Northern Trust: Are We There Yet?

Is the economic recovery at hand? No, we still are mired in a recession that is going to be of the longest duration in the post-WWII era (the previous record was 16 months) and is likely to involve the largest annual average contraction in real GDP for a single year (the record to beat is a decline of 1.9%, which occurred in 1982). But there is a good chance that the worst for the U.S. economy in terms of quarterly contractions in real GDP is behind us, occurring in the fourth quarter of 2008. We currently are forecasting an annualized rate of contraction in real GDP of 3.8% in the first quarter of this year vs. the annualized rate of contraction of 6.3% in the fourth quarter of 2008. So, economic activity still is descending, but our forecast has the rate of descent moderating. We do not expect any growth in real GDP until the fourth quarter of this year.

See the research note for much more.

I'm surprised Kasriel has revised up his Q1 GDP forecast all the way to minus 3.8% (from -4.9%). It appears PCE will probably be flat or even slightly positive in Q1, the investment slump in Q1 will be stunning (See Q1 GDP will be Ugly). Also, it appears the inventory correction in Q1 was significant, however trade might be a little more positive than I expected earlier.

Note: Kasriel has revised down his GDP estimate for Q2 (now -3.3% and -1.0% respectively).