by Calculated Risk on 6/08/2009 08:48:00 PM

In some cities there are a substantial number of uncounted new condos for sale or just sitting vacant. These units are not included in the Census Bureau new home sales inventory report.

Here is a short video from Jim the Realtor of a few more units in Encinitas (north county San Diego). Hey ... where are the gas meters?

by Calculated Risk on 6/08/2009 06:14:00 PM

From the SCOTUS Blog: Ginsburg temporarily blocks Chrysler deal

Supreme Court Justice Ruth Bader Ginsburg put a temporary hold Monday on the deal to sell Chrysler to save it from collapse. Her order, however, simply gives her or the full Court more time to ponder whether to postpone the sale further, or allow it to go forward. The order can be found here.
...
The deal remains in legal limbo until Ginsburg, as the Circuit Justice, or the full Court takes some definitive action. There is now no timetable for further action at the Supreme Court, although the terms of the deal allow Chrysler’s new business spouse — Fiat, the Italian automaker — to back out as of next Monday if the deal has not closed. Moreover, the papers filed in the Supreme Court have suggested that Chrysler is losing money at the rate of $100 million a day, pending the sale. That gives the Justices some incentive not to let much time pass before acting.

There is more ...

by Calculated Risk on 6/08/2009 05:46:00 PM

From the Fed:

The 10 banking organizations required by the Supervisory Capital Assessment Program to bolster their capital buffers have all submitted capital plans that, if implemented, would provide sufficient capital to meet the required buffer under the assessment's more-adverse scenario. As supervisors, we will be working with the institutions to ensure their plans are implemented quickly and effectively.

Supervisors also continue to work with all regulated financial institutions to review the quality of their corporate-governance, risk-management and capital-planning processes.

by Calculated Risk on 6/08/2009 03:58:00 PM

Paul Krugman is delivering a three part lecture at the London School of Economics starting today.

Bloomberg has some quotes: Nobel Laureate Krugman Says Recession May End ‘This Summer’

“I would not be surprised if the official end of the U.S. recession ends up being, in retrospect, dated sometime this summer,” he said in a lecture today at the London School of Economics. “Things seem to be getting worse more slowly. There’s some reason to think that we’re stabilizing.”
...
Even with a recovery, “almost surely unemployment will keep rising for a long time and there’s a lot of reason to think that the world economy is going to stay depressed for an extended period,” Krugman said.

The next two lectures will be Tuesday ("The eschatology of lost decades") and Wednesday ("The night they reread Minsky") at 6:30 PM London Time.

The live webcasts are here.

by Calculated Risk on 6/08/2009 02:42:00 PM

Economic letter from the San Francisco Fed: Jobless Recovery Redux?

Although the pace of layoffs appears to be subsiding and the overall economy is showing hints of stabilization, most forecasters expect unemployment to continue to increase in coming months and to recede only gradually as recovery takes hold. In this Economic Letter, we evaluate this projection using data on three labor market indicators: worker flows into and out of unemployment; involuntary part-time employment; and temporary layoffs. We pay particular attention to how these indicators compare with data from previous episodes of recession and recovery. Our analysis generally supports projections that labor market weakness will persist, but our findings offer a basis for even greater pessimism about the outlook for the labor market. Specifically, we suggest that the relatively low level of temporary layoffs and high level of involuntary part-time workers make a jobless recovery similar to the one experienced in 1992 a plausible scenario.
emphasis aded

Click on graph for larger image in new window.

What does all this mean for the course of the labor market? We combine data on involuntary part-time workers with the standard unemployment rate to arrive at an alternative measure of labor underutilization. We plot this measure in Figure 3, which shows that the labor market has considerably more slack than the official unemployment rate indicates. The figure extends this labor underutilization measure using the Blue Chip consensus forecast for the unemployment rate as a benchmark and then adding a share of involuntary part-time workers based on the proportion of workers in that category to the unemployed during the current recession. This projection indicates that the level of labor market slack would be higher by the end of 2009 than experienced at any other time in the post-World War II period, implying a longer and slower recovery path for the unemployment rate. This suggests that, more than in previous recessions, when the economy rebounds, employers will tap into their existing workforces rather than hire new workers. This could substantially slow the recovery of the outflow rate and put upward pressure on future unemployment rates.

This weekend I plotted some graphs of jobs and the unemployment rate for four recessions and recoveries (1981, 1990, 2001, and the current recession). See: Jobs and the Unemployment Rate. Here is the graph for the 1990 recession and the jobless recovery that followed:

The unemployment rate continued to rise for 15 months after the recession ended.

The researchers argue that the labor recovery following the current recession may be similar or worse than the jobless recovery following the 1991 recession:

[S]hould labor market conditions ... proceed along the path taken in the 1992 recovery, the unemployment rate could peak close to 11% in mid-2010 and remain above 9% through the end of 2011.