by Calculated Risk on 12/22/2009 08:28:00 AM

From the BEA:

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 2.2 percent in the third quarter of 2009 ...

GDP was revised down from the advance estimated of 3.5% to the preliminary estimate of 2.8%, and now to 2.2%.

Personal consumption expenditures (PCE) were revised down to 2.8% from 2.9%.

And investment in nonresidential structures was revised down to -18.4% from -15.1% (aka falling off a cliff).

by Calculated Risk on 12/21/2009 10:51:00 PM

Earlier today I mentioned that the Fed started using First American CoreLogic's LoanPerformance House Price Index last year for the Flow of Funds report.

And also that LoanPerformance announced today that house prices fell 0.7% in October.

Since most people have been following Case-Shiller, here is a graph of the LoanPerformance index (with and without foreclosures) and the Case-Shiller Composite 20 index.

Click on graph for larger image in new window.

This graph shows the three indices with January 2000 = 100.

The indices mostly move together over time. Notice how the total LoanPerformance index fell further than the index excluding foreclosures - and also rebounded more.

The Case-Shiller index will probably show a decline in October - although Case-Shiller is an average of three months, so it might be a small decrease. The question is how much further will prices fall?

by Calculated Risk on 12/21/2009 07:31:00 PM

From the WaPo: Number of delinquent bailed-out banks rises

A growing number of the recipients face financial problems and have been unable to pay the government. Fifteen banks failed to make the required payments in May, federal data show. The number climbed to 33 banks in August, and 55 banks that failed to make the dividend payments due Nov. 17.

Here is the report from the Treasury.

And in excel format under Dividend and Interest Reports.

There are three permanent deadbeats on the list: CIT Group (filed bankruptcy and wiped out its $2.3 billion in TARP debt), UCBH Holdings Inc. was seized by the FDIC (TARP lost $298.7 million), and Pacific Coast National Bank was also seized by the FDIC (TARP lost $4.1 million).

Remember when the TARP capital was supposed to only go to "healthy" financial institutions?

by Calculated Risk on 12/21/2009 04:53:00 PM

The Fed's favorite house price indicator from First American CoreLogic’s LoanPerformance ...

From LoanPerformance: Annual Home Prices Continue to Depreciate

On a month-over-month basis ... national home prices declined by -0.7 percent in October 2009 compared to September 2009.
...
"We are continuing to see improvements in the year-over-year home price change as prices have remained relatively stable since April," said Mark Fleming, chief economist for First American CoreLogic. "The crutches of government support for the housing market have stimulated demand and restricted supply in 2009. How these government supports are removed in 2010 will be critical to the continued stability of the housing market."

Prices are now falling again. It might take a month or two for this to show up in the Case-Shiller index because it is an average over three months.

Click on graph for larger image in new window.

This graph shows the national LoanPerformance data since 1976. January 2000 = 100.

The index is off 7.9% over the last year, and off 30.1% from the peak.

The index has declined for two consecutive months (-0.16% in September and -0.68% in October). I'll have some comparisons to Case-Shiller later, but it appears house prices are now falling again.

by Calculated Risk on 12/21/2009 02:43:00 PM

First a chart that is being circulated by some of the more optimistic forecasters:

Click on graph for larger image.

This chart compares the monthly change in temporary help services (shifted 4 months into the future) and the monthly change in total employment. Sure enough temporary help tends to lead total employment.

Note: chart uses three month average change. Source: BLS.

A number of analysts are now forecasting a surge in employment in early 2010 partially based on this chart.

This surge in temporary help is following the usual pattern as Louis Uchitelle notes in the NY Times: Labor Data Show Surge in Hiring of Temp Workers

The hiring of temporary workers has surged, suggesting that the nation’s employers might soon take the next step, bringing on permanent workers, if they can just convince themselves that the upturn in the economy will be sustained.
...
"When a job comes open now, our members fill it with a temp, or they extend a part-timer’s hours, or they bring in a freelancer — and then they wait to see what will happen next,” said William J. Dennis Jr., director of research for the National Federation of Independent Business.

And that is the real question: what comes next.

I've been forecasting a strong second half for GDP since late Spring, so I'm not surprised about the pickup in Q3 and Q4 GDP. This increase in GDP has been driven by the stimulus spending, some inventory restocking, and some export growth.

But my concern is about 2010.

And this is the concern of the hiring managers mentioned in the article:

If this restocking of shelves and warehouses were to stop or slow next year, a possibility that concerns Mr. Littlefield and Ms. Baker, then the temps, freelancers and contract workers they and many other employers now use would have a harder time moving from casual to regular employment.

If the recovery stalls or even slows - as I expect - then employment will not pick up sharply.

For more, including some cautionary comments from a BLS economist on using temporary help, see Tom Abate's article in the San Francisco Chronicle. And for a graph of temporary help vs. the unemployment rate, see my earlier post on Temporary Help.